Pakistan’s headline inflation clocked in at 27.4% on a year-on-year basis in August, the Pakistan Bureau of Statistics (PBS) said on Friday, marginally lower than the reading in July when it stood at 28.3%. On a month-on-month basis, it was up 1.7%.

This takes 2MFY24’s average inflation to to 27.85%, higher than 2MFY23’s average of 26.10%.

The Consumer Price Index-based reading for August is also the lowest in calendar year 2023.

Experts, however, believe the reading is set to go higher in coming months as rupee depreciation, higher energy tariffs, and record-high fuel prices take their toll on consumers’ pockets.

The caretaker government announced another hike in petrol and diesel prices, taking them to Rs305.36 and Rs311.84 per litre, respectively, from Friday.

The latest increase means the price of petrol has increased nearly 21% or Rs52.36 since the start of August.

The State Bank of Pakistan (SBP) is set to hold its Monetary Policy Committee (MPC) meeting on September 14 to decide the key policy rate, which currently stands at a record 22%. Most analysts expect a rate hike in the announcement.

Urban, rural inflation

The PBS said that CPI inflation Urban increased to 25.0% on year-on-year basis in August 2023 as compared to anincrease of 26.3% in the previous month and 26.2% in August 2022.

On month-on-month basis, it increased to 1.6% in August 2023 as compared to an increase of 3.6% in the previous month and an increase of 2.6% in August 2022.

CPI inflation Rural, increased to 30.9% on year-on-year basis in August 2023 as compared to an increase of 31.3% in the previous month and 28.8% in August 2022. On month-on-month basis, it increased to 1.9% in August 2023 as compared to an increase of 3.3% in the previous month and an increase of 2.2% in August 2022.