Pakistan’s consumer price index (CPI) witnessed a significant decline in August 2024, with inflation rising by 9.6% year-on-year (YoY), marking a 34-month low, according to data released by the Pakistan Bureau of Statistics (PBS) on Monday.
This latest CPI reading reflects a notable decrease from the 11.1% inflation rate recorded in July 2024 and a sharp drop from the 27.4% inflation rate reported in August 2023. Despite the decline, the monthly inflation rate still increased by 0.39% in August, PBS reported.
Karachi-based brokerage firm Topline Securities highlighted that the current inflation rate represents the lowest in nearly three years. “This takes the two-month average inflation for FY25 to 10.36% compared to 27.84% in the same period of FY24,” the firm stated.
Urban vs. Rural Inflation Rates
The data revealed a disparity in inflation rates between urban and rural areas, with urban regions experiencing an inflation rate of 11.7%, while rural areas saw a lower rate of 6.7% in August. This decline in inflation continues the downward trend observed in previous months. In July, the inflation rate was 11.1% YoY, compared to 12.6% in June and a staggering 28.3% in July 2023.
Prime Minister Shehbaz Sharif’s Response
Prime Minister Shehbaz Sharif expressed satisfaction with the declining inflation rate and improvements in other economic indicators. His remarks followed the Ministry of Finance’s August outlook, which predicted inflation to remain between 9.5% and 10.5% in August, with potential further decreases to 9-10% in September, citing stabilization in economic indicators.
“After Fitch, the global rating agency, Moody’s recently upgraded Pakistan’s credit rating, which is an acknowledgment of the country’s positive economic indicators by international financial institutions,” said Prime Minister Sharif.
Moody’s upgraded Pakistan’s local and foreign currency issuer and senior unsecured debt ratings to Caa2 from Caa3, citing “improving macroeconomic conditions and moderately better government liquidity and external positions, from very weak levels.”
Detailed Inflation Breakdown
- Urban Year-on-Year Changes:
- Food Prices: Onions (136.32%), fresh vegetables (76.35%), pulse gram (42.35%), chickpea flour (31.15%), fish (28.98%), fresh fruits (27.32%), pulse moong (25.05%), and milk powder (24.17%).
- Non-Food Prices: Gas charges (318.74%), motor vehicle tax (168.79%), dental services (28.84%), and cotton cloth (24.17%).
- Rural Year-on-Year Changes:
- Food Prices: Onions (144.27%), fresh vegetables (57.31%), pulse gram (39.19%), beans (30.52%), pulse moong (29.46%), milk powder (28.42%), butter (26.14%), fresh fruits (25.11%), and fish (24.13%).
- Non-Food Prices: Motor vehicle tax (126.61%), woolen readymade garments (38.42%), education (22.95%), cotton cloth (22.13%), and marriage hall charges (21.77%).
- Urban Month-on-Month Changes:
- Food Prices: Onions (22.84%), chicken (13.62%), eggs (12.39%), fresh vegetables (12.25%), chickpea flour (4.88%), pulse gram (4.55%), and gram whole (3.82%).
- Non-Food Prices: Motor vehicle tax (168.79%), stationery (5.08%), hosiery (3.41%), and personal effects n.e.c. (2.47%).
- Rural Month-on-Month Changes:
- Food Prices: Chicken (19.69%), fresh vegetables (18.67%), onions (17.72%), eggs (14.28%), pulse gram (5.32%), and chickpea flour (4.44%).
- Non-Food Prices: Motor vehicle tax (126.61%), dental services (3.24%), and stationery (2.55%).
This report underscores the ongoing challenges of inflation management in Pakistan, despite recent improvements in economic conditions.
