Pakistan’s headline inflation rate stood at 4.1% in December 2024, according to data issued by the Pakistan Bureau of Statistics (PBS) on Wednesday.
This is the lowest recorded inflation in Pakistan in 81 months, according to brokerage firm Topline Securities.
According to the PBS, inflation declined to 4.1 % year-on-year in December 2024, compared to 29.7% in December 2023. It stood at 4.9% in November. On a month-on-month basis, the inflation increased by 0.1% in December 2024 compared to 0.5% the previous month. For the first six months of the ongoing fiscal year, inflation has averaged at 7.22% compared to 28.79% in the corresponding period last year.
Inflation peaked at 38% last year before declining at a faster than anticipated rate this year. The State Bank of Pakistan has reduced the interest rate from 22% to 13% this year on the back of declining inflation, while noting that inflation expectations of consumers and businesses remain volatile. If inflation continues to decline or sustain at its current level, analysts predict the interest rate may return to single digits for the first time since April 2022.
In its monthly outlook released last week, the Finance Ministry had said it expected inflation to stay within the 4-5% range in December.
Urban inflation
The PBS data states that inflation in urban areas decreased to 4.4% year-on-year in December 2024 compared to 5.2% in the previous month and 30.9% in December 2023.
On a year-on-year basis, the PBS said the following food items saw price increases: Pulse Gram (54.25%), Besan (52.15%), Tomatoes (44.71%), Potatoes (37.03%), Pulse Moong (34.50%), Fish (25.47%), Gram Whole (24.16%), Honey (22.75%), Meat (21.38%), Milk Powder (20.64%), Butter (14.14%), Beans (13.79%), Fresh Fruits (11.49%), Vegetable Ghee (11.29%), Mustard Oil (10.63%), Dry Fruits (10.50%), Sweetmeat (10.30%), Milk fresh (10.21%) and Fresh Vegetables (9.96%).
Meanwhile the following foots items saw price decreases: Wheat (33.82%), Wheat Flour (33.77%), Onions (13.32%), Wheat Products (10.07%), Pulse Masoor (9.21%), Pulse Mash (5.89%), Rice (4.62%), Sugar (3.57%), Tea (3.51%), Eggs (2.45%) and Chicken (1.87%).
In non-food items, prices increased for Motor Vehicle Tax (168.79%), Footwear (31.86%), Woolen Readymade Garments (19.16%), Drugs and Medicines (16.35%), Communication Services (15.68%), Household Textiles (15.11%), Water Supply (15.04%), Hosiery (14.61%) and Solid Fuel (14.46%).
Prices decreased for the non-food items of Electricity Charges (9.44%), Motor Fuel (6.61%) and Communication Apparatus (0.88%).
Rural inflation
In rural areas, inflation decreased to 3.6% year-on-year in December 2024 compared to 4.3% in the previous month and 27.9% in December 2023.
On a year-on-year basis, the PBS said the following food items saw price increases in rural areas: Pulse Gram (61.36%), Besan (50.66%), Pulse Moong (36.14%), Potatoes (32.05%), Milk Powder (26.61%), Butter (24.91%), Tomatoes (24.35%), Honey (22.70%), Fish (22.13%), Meat (21.49%), Gram Whole (21.19%), Beans (15.53%), Vegetable Ghee (15.44%), Cooking Oil (14.11%), Dry Fruits (13.03%), Mustard Oil (10.96%), Milk Products (10.42%), Milk Fresh (9.95%), Readymade Food (8.35%) and Condiments and Spices (8.13%).
The items that saw price declines were Wheat Flour (35.55%), Wheat (34.11%), Wheat Products (12.89%), Tea (5.93%), Sugar (5.64%), Onions (5.10%), Rice (4.70%), Pulse Masoor (3.78%), Chicken (2.49%) and Pulse Mash (0.40%).
In non-food items, rural areas saw increases to Motor Vehicle Tax (126.61%), Education (22.96%), Communication Services (18.70%), Cotton Cloth (17.91%), Drugs and Medicines (17.58%) and Woolen Readymade Garments (16.95%).
Non-food items that saw decreases were Electricity Charges (9.44%), Motor Fuels (7.25%) and Transport Services (0.44%).