Pakistan's Inflation Falls to Single Digits for the First Time in Three Years
Pakistan’s headline inflation rate dropped to 9.6% year-on-year in August 2024, marking a significant decrease from July’s 11.1% and entering single-digit territory for the first time in three years, according to the Pakistan Bureau of Statistics (PBS).
This is the lowest inflation rate since October 2021, when it was 9.2%.
On a month-on-month basis, the Consumer Price Index (CPI) rose by 0.4% in August 2024, a slower pace compared to the 2.1% increase in July and the 1.7% rise in August 2023. This aligns with the Ministry of Finance’s forecast, which had projected inflation to be between 9.5% and 10.5% for August.
The Ministry of Finance credited the decrease to improved stability in economic indicators and expects inflation to continue declining, with a forecast range of 9% to 10% for September 2024.
This decline follows the State Bank of Pakistan’s (SBP) decision to lower the key policy rate by 100 basis points to 19.5% in July, addressing potential risks to inflation from fiscal imbalances and energy price adjustments.
Inflation has been a significant challenge for Pakistan, peaking at a record 38% in May of the previous year. However, it has been on a gradual downward trajectory since then.
