Pakistan’s headline inflation stood at 6.9% year-on-year in September 2024, marking a drop from 9.6% recorded in August, according to the latest data from the Pakistan Bureau of Statistics (PBS).
This is the lowest inflation figure since January 2021, indicating a positive trend in the country’s economic landscape.
The month-on-month Consumer Price Index (CPI) also saw a decline of 0.5% in September, compared to a 0.4% increase in the previous month and a 2.0% rise in September 2023.
Experts attribute the reduction in inflation to several factors, including a high base effect from last year, declining global commodity and energy prices, and a stable exchange rate.
The government had anticipated inflation to hover between 8-9% in the coming months, as stated in the Ministry of Finance’s ‘Monthly Economic Update and Outlook.’ However, the lower-than-expected figure for September has raised expectations for further cuts in the key policy rate.
In its September Monetary Policy Committee (MPC) meeting, the SBP had already implemented a 200 bps rate cut, bringing the policy rate down to 17.5% in response to slowing inflation and falling international oil prices. This marked the most aggressive rate cut since April 2020.
Meanwhile, the PBS data also showed a split between urban and rural inflation rates. Urban CPI inflation for September 2024 was recorded at 9.3% year-on-year, compared to 11.7% in August and 29.7% in September 2023.
In rural areas, inflation decreased to 3.6% from 6.7% in the previous month and 33.9% in September 2023.
This consistent disinflation marks a clear shift from May 2023, when inflation peaked at a record 38%, and signals an improvement in the country’s economic conditions.
