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Lowest reading since Jan 2021: inflation in Pakistan clocks in at 6.9% in September 2024

  • Reading also lower than market expectations that put figure in range of 7.5-8%
Published October 1, 2024

Pakistan’s headline inflation clocked in at 6.9% on a year-on-year basis in September 2024, lower than the reading in August 2024 when it stood at 9.6%, showed Pakistan Bureau of Statistics (PBS) data on Tuesday.

The CPI reading is the lowest since January 2021, according to the PBS.

“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,” said Mohammed Sohail, CEO Topline Securities, in a note.

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.

Experts attributed the slowing inflation trend to several key factors, including a high base effect, declining global commodity and energy prices, and a stable exchange rate.

The reading is also lower than official expectations. The finance ministry had stated that it expects inflation to decelerate further in the next two months (September-October), and hover around 8-9%, in the monthly economic outlook released on Friday.

“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’.

The slowing inflation figure also gives impetus to a further cut in the key policy rate.

In September, the SBP in its last Monetary Policy Committee (MPC) unleashed 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,” said Shahid Ali Habib, CEO Arif Habib Limited, in a note.

Inflation in Pakistan has been a significant and persistent economic challenge, particularly in recent years. In May of last year, the CPI inflation rate hit a record high of 38%. However, it has been on a downward trajectory since then.

Meanwhile, the latest reading was also lower than projections made by a number of brokerage houses.

JS Global expected inflation reading to clock in at 7.5%.

“Progressing through the ‘year of disinflation’ on favourable base effect from last year’s elevated prices, Pakistan’s Sep-2024 CPI is expected to clock in close to 7.5% - lowest in almost 4 years (since Jan-2021), despite a slight MoM uptick,” said the brokerage house.

Urban, rural inflation

The PBS said CPI inflation urban clocked in at 9.3% on year-on-year basis in September 2024 as compared to 11.7% in the previous month and 29.7% in September 2023.

On month-on-month basis, it decreased by 0.5% in September 2024 as compared to an increase of 0.3% in the previous month and an increase of 1.7% in September 2023.

CPI inflation rural decreased to 3.6% on year-on-year basis in September 2024 as compared to 6.7% in the previous month and 33.9% in September 2023.

On month-on-month basis, it decreased by 0.5% in September 2024 as compared to an increase of 0.6% in the previous month and an increase of 2.5% in September 2023

Comments

200 characters
SAd Oct 01, 2024 03:41pm
Great Going. We need to keep the fiscal balance in check & make sure there are no let offs. Protestors, false social media activists & disruptors should be put behind bars for indefinite time.
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Rafique Oct 01, 2024 04:22pm
superb & great news for the economy of Pakistan. Government should placed tight fiscal policy to keep things on track. Good work of government team
thumb_up Recommended (0) reply Reply
Aamir Oct 01, 2024 05:53pm
Such sudden decrease in inflation can be an indicator of very low demand. Are we moving from high inflation to recession?
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Az_Iz Oct 01, 2024 06:50pm
Now is a good time to double the Petroleum levy and generate another Rs 1 trillion in revenue,when inflation & crude prices are down.Use the money to lower electricity prices for all.
thumb_up Recommended (0) reply Reply
Ali Oct 02, 2024 02:58am
@SAd, Exactly,Imran Khan and his rabble rousers should be controlled. All they want is chaos.
thumb_up Recommended (0) reply Reply