ISLAMABAD: Pakistan’s inflation clocked in at 6.9% on a year-on-year basis in September 2024, the bureau of statistics said on Tuesday, slowing to the lowest rate in almost four years after the government slashed fuel prices and food costs eased.
Consumer prices rose 6.93% in September from a year ago, according to data released by Pakistan Bureau of Statistics. The reading in August 2024 stood at 9.6%.
On a month-on-month basis, CPI decreased by 0.5% in September 2024 as compared to an increase of 0.4% in the previous month and an increase of 2.0% in September 2023.
“CPI National for the month of September, 2024 decreased to 6.93% over September, 2023,” the statistics bureau said in a statement. “The Urban CPI decreased to 9.29% while Rural CPI decreased to 3.65%.”
“Due to aggressive monetary tightening, the State Bank of Pakistan (SBP) has achieved bringing inflation below the one-year target of 7% ahead of time,” Mohammed Sohail, CEO Topline Securities, said in a note.
Pakistan’s Finance Division announced on Monday it had slashed the price of petrol by Rs2.07 per liter till the next fortnight due to the fluctuating global prices of petroleum products.
Petroleum and electricity prices have been the key drivers of high inflation in Pakistan over the past two years. Inflation averaged close to 30% in FY23 and 23.4% in FY24, which ended on June 30, 2024.
The September inflation reading is lower than official expectations, as the finance ministry had expected inflation to decelerate in the next two months (September-October) and hover around 8-9%.
“Inflation is expected to remain within the range of 8% to 9% in September and October 2024,” the Ministry of Finance said in its ‘Monthly Economic Update and Outlook’ released last week.
The slowing inflation figure also gives impetus to a further cut in the key policy rate.
In September, the central bank announced its most aggressive cut in the key policy rate since April 2020, reducing it by 200bps to bring it down to 17.5% amid slowing inflation and declining international oil prices.
“With continued disinflation expected, mainly on the back of high base effect, falling global commodities, this gives SBP room to keep lowering the policy rate, as real interest rates are nearly 1090bps positive,” Shahid Ali Habib, CEO Arif Habib Limited, said in a note.
The IMF last month approved a $7 billion loan program that includes tough measures such as higher taxes on farm incomes and electricity prices. The prospect of such moves has worried poor and middle-class Pakistanis. But inflation has started moving on a downward trend, albeit from a high base.
