Pakistan’s inflation rate drops to 44-month low in September 2024

ISLAMABAD: Pakistan’s headline inflation has taken a significant dip, registering at 6.9% year-on-year in September 2024, down from 9.6% in August. This marks the lowest consumer price index (CPI) reading since January 2021, a remarkable achievement for the country’s economy.

The decline in inflation is attributed to several factors, including a high base effect, decreasing global commodity and energy prices, and a stable exchange rate.

Mohammed Sohail, CEO of Topline Securities, noted that the State Bank of Pakistan’s (SBP) aggressive monetary tightening has successfully brought inflation below the one-year target of 7% ahead of schedule.

On a month-to-month basis, the CPI fell by 0.5% in September 2024, contrasting with a 0.4% rise in the previous month and a 2.0% increase in September 2023.

This downward trend is a positive sign for Pakistan’s economy, indicating that the measures taken by the SBP are yielding the desired results.

The Pakistan Bureau of Statistics (PBS) released the data on Tuesday, providing a boost to the country’s economic outlook. Experts predict that this decline in inflation will have a positive impact on the overall economy, potentially leading to increased consumer spending and economic growth.

Moreover, Pakistan has seen a significant drop in food prices, bringing relief to consumers. According to the Federal Bureau of Statistics, essential items like tomatoes, vegetables, and fruits have become cheaper by 24.34%, 18%, and 4.49% respectively in September.

Wheat flour prices also decreased by 5.53%, with wheat itself becoming 4.46% more affordable. Pulses like daal masoor and daal mash saw price reductions of 4% and 2.67%.

However, some food items experienced price hikes. Gram prices rose by 15% in urban areas, pulses by 13.48%, and eggs by 7.33%. Other notable increases include white gram (5%), onions (5%), spices (3.32%), and ready-made food items (2.54%). Meat and potatoes also became costlier, with price hikes of 2.37% and 1%.

On an annual basis, food prices declined by 0.59%, but perishable food items saw a 20.37% increase. Non-food items also exhibited price increases, with clothing and footwear surging by 15.52%, housing, water, electricity, and gas costs rising by 20.86%, and health services increasing by 13.69%.

Despite these increases, there’s some relief in transport fares, which decreased by 7.26% over the same period. However, hotel and restaurant charges rose by 9.14%, contributing to inflation in the services sector.

This drop in inflation is a welcome change for the public and the government, which has faced pressure to stabilize prices amidst global market fluctuations and economic challenges.