Pakistan’s headline inflation rate dropped to 9.6% year-on-year in August 2024, down from 11.1% in July 2024, according to the Pakistan Bureau of Statistics (PBS). This marks the first time in three years that inflation has fallen back to single digits, with the last occurrence being in October 2021 when the CPI inflation stood at 9.2%.
On a month-on-month basis, the Consumer Price Index (CPI) increased by 0.4% in August 2024, a significant drop from the 2.1% increase in the previous month and the 1.7% increase in August 2023.
These figures are in line with the official expectations, as the finance ministry had forecasted inflation to range between 9.5% and 10.5% in August 2024, with a further decline to 9-10% in September 2024.
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This decrease in inflation comes after the State Bank of Pakistan (SBP) cut the key policy rate by 100 basis points to 19.5% in its last Monetary Policy Committee (MPC) meeting in July, citing “risks to the inflation outlook from fiscal slippages and ad-hoc decisions related to energy price adjustments”.
In addition, the PBS reported that the urban CPI inflation was at 11.7% in August 2024, down from 13.2% in the previous month, while rural CPI inflation stood at 6.7%, down from 8.1% in the previous month. On a month-on-month basis, urban and rural inflation both showed a decrease compared to the previous month.
Overall, these figures indicate a positive trend in inflation, aligning with projections from various brokerage houses, and suggesting a potential continuation of the easing cycle with further interest rate cuts in the upcoming months.
