Pakistan's inflation drops to single digit after nearly 3 years

ISLAMABAD: Pakistan's annual core inflation, measured by Consumer Price Index (CPI), decelerated further to 9.6% in August, the first single-digit reading in almost three years, the Pakistan Bureau of Statistics (PBS) said on Monday.

“CPI general inflation increased to 9.6% on year-on-year basis in August 2024 as compared to an increase of 11.1% in the previous month and 27.4% in August 2023”, the PBS said. 

The economy had been battling with inflation topping 20% since May 2022, peaking at a staggering 38% last May and these skyrocketing inflation rates coincided with the reforms implemented as part of a much-needed International Monetary Fund (IMF) bailout programme.

A day earlier, Prime Minister Shehbaz Sharif also expressed satisfaction over the "nosediving of inflation rate" in the country and upgradation of credit rankings by international financial institutions, including Fitch and Moody’s.

The premier’s statement came after the Ministry of Finance — in its monthly outlook report — stated that on account of stability in economic indicators, inflation is expected to remain within the range of 9.5-10.5% in August and further decline to 9-10% in September.

Moody's Ratings upgraded Pakistan's local and foreign currency issuer and senior unsecured debt ratings to Caa2 from Caa3 owing to improvement in macroeconomic conditions.

“CPI general inflation increased to 9.6% on year-on-year basis in August 2024 as compared to an increase of 11.1% in the previous month and 27.4% in August 2023”, the PBS said.

On month-on-month basis, it increased to 0.4% in August 2024 as compared to an increase of previous month’s 2.1% and an increase of 1.7% in August 2023.

According to data, CPI inflation in urban areas increased to 11.7% on year-on-year basis as compared to an increase of 13.2% in the previous month and 25.0% in August 2023.

On month-on-month basis, it increased to 0.3% as compared to an increase of 2.0% in the previous month and an increase of 1.6% in August 2023.

Meanwhile, CPI inflation rural increased to 6.7% on year-on-year (YoY) basis in August 2024 as compared to an increase of 8.1% in the previous month and 30.9% in August 2023.

On month-on-month (MoM) basis, it increased to 0.6% in August 2024 as compared to an increase of 2.2% in the previous month and an increase of 1.9% in August 2023.

On the other hand, the Sensitive Price Indicator (SPI) inflation on YoY increased to 10.8% in August 2024 as compared to an increase of 15.7% a month earlier and 27.9% in August 2023.

On MoM basis, it decreased to 0.3% in August 2024 as compared to an increase of 2.0% a month earlier and an increase of 4.1% in August 2023.

Month-on-month

Prices of food item that increased on a MoM basis included onions (22.84%), chicken (13.62%), eggs (12.39%), fresh vegetables (12.25%), besan (4.88%), pulse gram (4.55%), gram whole (3.82%), potatoes (2.90%), pulse moong (2.83%), milk fresh (1.27%), milk products (1.20%) and vegetable ghee (1.10%).

Non-food items that increased included motor vehicle tax (168.79%), stationery (5.08%), drugs and medicines (1.35%), readymade garments (1.24%), plastic products (1.03%), doctor (MBBS) clinic fee (0.88%).

Year-on-year

Prices of food item that increased on a MoM basis included onions (136.32%), fresh vegetables (76.35%), pulse gram (42.35%), besan (31.15%), fish (28.98%), fresh fruits (27.32%), pulse moong (25.05%), milk powder (24.17%), beans (23.35%), dry fruits (21.10%) and meat (19.04%).

Non-food items included gas charges (318.74%), motor vehicle tax (168.79%), dental services (28.84%), cotton cloth (24.17%), woolen readymade garments (23.31%) and transport services (22.87%).