Lowest since May 2018: inflation in Pakistan clocks in at 4.9% in November 2024

Pakistan’s headline inflation hit its lowest level since May 2018, clocking in at 4.9% on a year-on-year basis in November 2024, a reading that was also below that of October 2024 when it stood at 7.2%, showed Pakistan Bureau of Statistics (PBS) data on Monday.

On a month-on-month basis, CPI increased by 0.5% in November 2024 as compared to an increase of 1.2% in the previous month and an increase of 2.7% in November 2023.

CPI inflation average during 5MFY25 stood at 7.88% as compared to 28.62% in 5MFY24.

“This is the lowest inflation reading in 78 months,” said Topline Securities in a note.

The reading in November is also lower than official expectations.

In its monthly outlook released on Wednesday, the finance ministry stated that it expected inflation to stay within the 5.8-6.8% range in November and slow further to 5.6-6.5% by December.

“Inflation is expected to remain within the range of 5.8% - 6.8% in November, further receding to 5.6% - 6.5% by December 2024,” the Ministry of Finance had said in its ‘Monthly Economic Update and Outlook’.

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.

The declining inflation trajectory also gives impetus to a further cut in the key policy rate.

The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) is scheduled to be held on Monday, December 16.

In its last MPC held in November, the SBP announced a historic policy rate cut of 250 basis points (bps) that took the key rate to 15%, citing improved economic indicators and a faster-than-expected decline in inflation, to support macroeconomic stability.

Meanwhile, the latest CPI reading was in line with the projections made by several brokerage houses.

Topline Securities expected inflation reading to clock in at around 4.5-5% in November.

“Pakistan’s Consumer Price Index (CPI) for November 2024 is expected to clock in at 4.5-5% YoY (+0.4% MoM), taking 5MFY25 average to 7.91% compared to 28.62% in 5MFY24,” said the brokerage house.

JS Global projected CPI to fall to 4.7% in November.

“Pakistan’s ongoing sharp disinflation trend is expected to continue with a 6-year low CPI reading in Nov-2024 as CPI is set to tumble to 4.7% in Nov-2024, following a 7.2% reading in Oct-2024. This would take 5MFY25 average to 7.9%, down from 5MFY24 average of 28.6%,” JS Global said.

Urban, rural inflation

The PBS said CPI inflation urban decreased to 5.2% on a year-on-year basis in November 2024 as compared to 9.3% in the previous month and 30.4% in November 2023.

On a month-on-month basis, it increased by 0.5% in November 2024 compared to an increase of 1.1% in the previous month and an increase of 4.3% in November 2023.

CPI inflation rural increased by 4.3% on a year-on-year basis in November 2024 compared to 4.2% in the previous month and 27.5% in November 2023.

On a month-on-month basis, it increased by 0.5% in November 2024 compared to an increase of 1.5% in the previous month and 0.4% in November 2023.