CPI drops to 6.9% in Sep

October 01, 2024 (MLN): Pakistan inflation slowed to the lowest in almost four years, with consumer prices rising by 6.9% in September over the prior year. That is within the central bank's target range of 5-7%.

The inflation pace was significantly lower than the market expectations of 7.5% and was the lowest reading since January 2021.

It compares to a price gain of 9.6% last month and 31.4% in September 2023, Pakistan Bureau of Statistics (PBS) reported on Tuesday.

Accordingly, this takes the average yearly inflation of 3MFY25 to 9.2% compared to 29.0% in 3MFY24.

On a monthly basis, CPI fell 0.5% in September 2024 as compared to an increase of 0.4% in the previous month and an increase of 2.0% in September 2023.

The average core inflation, measured by non-food non-energy, rose 10.4% YoY in September 2024 as compared to an increase of 11.9% YoY in the previous month and an increase of 22.1% YoY in September 2023.

On a monthly basis, average core CPI increased 0.3% in September 2024 as compared to an increase of 0.5% in the previous month and an increase of 1.6% in September 2023.

The inflation pace slowed notably in September amid a fall in fuel and food costs.

Transport costs fell 7.3% over the prior year amid a significant fall in international oil prices. While food prices also declined 0.6% from last year.

Pakistan last week secured a $7 billion loan package from the International Monetary Fund Executive Board. The global lender also lowered the inflation forecasts for Pakistan, projecting consumer price gains to average 9.5% in FY25 from the earlier projection of 12.7%.

With the CPI-based inflation rate at 6.9% and the policy rate at 17.5%, the real interest rate now stands at 10.6%.

The State Bank of Pakistan (SBP) has slashed interest rates by a cumulative 450 basis points since June.

The significant slowdown in price gains will give policymakers additional room to continue monetary easing in a bid to spur growth.

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