Pakistan’s inflation drops to 11.1% in July, lowest since November 2021

Pakistan’s headline inflation for July 2024 clocked in at 11.1% year-on-year, down from 12.6% in June 2024, according to data from the Pakistan Bureau of Statistics (PBS). 

This marks the lowest Consumer Price Index (CPI) figure since November 2021, when it was 11.5%.

On a month-on-month basis, CPI inflation rose by 2.1% in July 2024, compared to a 0.5% increase in June. 

The July reading was below official expectations, with the finance ministry having anticipated a range of 12% to 13% in its monthly economic outlook released earlier.

The inflation figures follow a decision by the State Bank of Pakistan (SBP) to cut the key policy rate by 100 basis points to 19.5%, citing risks to the inflation outlook from fiscal slippages and ad-hoc energy price adjustments. 

Despite this reduction, the July inflation rate was slightly higher than projections by several brokerage houses.

Analysts believe that a high-base effect and recent decreases in petroleum prices will help cool off inflation, which had peaked at 38% in May 2023.

The PBS reported that urban CPI inflation was 13.2% year-on-year in July 2024, down from 14.9% in June 2024 and 26.3% in July 2023. Month-on-month, urban inflation increased by 2.0% in July 2024, compared to a 0.6% rise in June.

Rural CPI inflation was 8.1% year-on-year in July 2024, down from 9.3% in June 2024 and 31.3% in July 2023. Month-on-month, rural inflation rose by 2.2% in July 2024, compared to a 0.3% increase in June.