Pakistan’s Consumer Price Index (CPI) declined to 6.9% year-on-year in September 2024, its lowest value since January 2021, with analysts crediting this to a high base effect, easing commodity and energy markets, and a stable currency.
Data issued by the Pakistan Bureau of Statistics (PBS) noted that on a month-on-month basis, inflation fell 0.5% in September against an increase of 0.4% in the previous month. The indicators are a positive sign for the economy, as they create space for the State Bank of Pakistan (SBP) to lower the policy rate to facilitate industrialization and business.
According to market observers, the 6.9% recorded inflation for September is significantly better than projections of the finance ministry, which had last month projected inflation to hover around 8-9% in September and October.
The CPI measures household inflation and covers various price changes for household expenditures. According to the PBS figures, prices of items that increased in urban areas, year-on-year, during September are: onions (78%), Pulse Gram (56.98%), Besan (47.53%), Fish (29.85%), fresh vegetables (29.17%), milk powder (21.09%), chicken (21.08%), gas charges (318.74%), motor vehicle tax (168.79%), dental services (29.47%), and cotton cloth (19.63%).
Similarly, the prices that spiked in rural areas are as follows: onions (89.74%), Pulse Gram (48.05%), Besan (39.23%), milk powder (26.07%), beans (24.29%), meat (23.27%), motor vehicle tax (126.61%), education (22.73%), personal effects (22.05%), cotton cloth (19.19%), and communication services (18.70%).
At the same time, urban areas saw declines in prices of wheat (38.87%), wheat flour (37.23%), sugar (14.56%), cooking oil (11.85%), Gur (10.59%), wheat products (9.55%), Pulse Masoor (7.39%), mustard oil (6.96%), rice (6.72%), vegetable ghee (6.11%), tea (2.01%), bakery and confectionary (1.06%), dessert preparation (0.19%), motor fuel (17.07%) and Liquefied Hydrocarbons (0.32%)
In rural areas, prices that declined year-on-year include wheat flour (38.31%), wheat (36.76%), sugar (15.64%), wheat products (9.69%), cooking oil (8.36%), vegetable ghee (6.19%), gur (5.39%), rice (4.86%), mustard oil (3.99%), tea (0.09%), motor fuels (18.37%) and Liquefied Hydrocarbons (1.42%).
In a statement posted on X, Prime Minister Shehbaz Sharif described the single-digit inflation figures as “heartening” for Pakistanis. “Continued improvement in macroeconomic indicators is adding robust momentum to our economy which is poised to further accelerate ‘Ease of Living’ and will bring many positive changes for common man, as well as investors and industry,” he maintained.
According to analysts, the declining inflation is supported by lowering commodity prices globally, as well as a stable exchange rate. The International Monetary Fund (IMF) Executive Board approving a $7 billion loan program has also boosted the country’s economic sector.