ISLAMABAD – Pakistan’s Consumer Price Index (CPI) inflation dropped to 6.9% year-on-year in September 2024, the lowest since January 2021, down from 9.6% in August.
This decline is attributed to a high base effect, easing of commodity and energy markets, and a stable currency, as reported by the Pakistan Bureau of Statistics (PBS).
Data released by PBS on Tuesday showed a month-on-month inflation decrease of 0.5% in September, compared to a 0.4% increase in August.
The annual inflation rate fell to 9.6% in August, marking the first single-digit figure in nearly three years, largely due to currency stability over the past year.
Inflation figures surpassed market and official projections, as the finance ministry had predicted a decrease to 8-9% in the next two months (September-October).
This drop strengthens the case for further monetary policy easing by the central bank. The State Bank of Pakistan (SBP) reduced its policy rate by 200 basis points to 17.5% last month, the third consecutive cut since June to boost economic growth amid easing inflation.
“Due to aggressive monetary tightening, SBP has achieved bringing inflation below 7% one year ahead of the target,” said Mohammad Sohail, CEO of Topline Securities.
Analysts suggest that as disinflation is expected to continue, mainly due to a high base effect and declining global commodities, the SBP will likely have more room for further rate cuts.
