In August 2024, Pakistan’s inflation rate decreased to 9.6% year-on-year, marking its return to single digits after three years. This is a significant drop from July 2024’s 11.1%. According to data from the Pakistan Bureau of Statistics (PBS), this is the lowest inflation rate since October 2021 when it was 9.2%.
On a month-on-month basis, the Consumer Price Index (CPI) rose by 0.4% in August 2024, a slowdown compared to the 2.1% increase recorded in July 2024 and 1.7% in August 2023. The latest figures align with the finance ministry’s expectations, which had projected an inflation range of 9.5% to 10.5% for August. The Ministry of Finance anticipates inflation to remain between 9.5% and 10.5% in August and to further decline to 9-10% by September 2024.
This inflation drop follows the State Bank of Pakistan’s (SBP) decision to cut the key policy rate by 100 basis points in July, reducing it to 19.5%. The rate cut was aimed at addressing inflation risks related to fiscal policies and energy price adjustments.
Despite a high of 38% CPI inflation in May of the previous year, recent months have shown a downward trend. Projections from brokerage houses also reflect this trend. JS Global forecasted a 9.3% inflation rate, while Arif Habib Limited (AHL) anticipated a rate of 9.6%. Both firms suggest that the easing cycle may continue with potential interest rate cuts in upcoming months.
In terms of regional inflation, urban CPI inflation stood at 11.7% year-on-year in August 2024, down from 13.2% the previous month and 25.0% a year ago. Rural CPI inflation was at 6.7% year-on-year, compared to 8.1% last month and 30.9% in August 2023.
