CPI eases to 11.1% YoY despite monthly jump

August 01, 2024 (MLN): The consumer price index (CPI) for July 2024 clocked in at 11.1% YoY, compared to 12.6% YoY in the last month and 28.3% YoY in July 2023, the latest data issued by the Pakistan Bureau of Statistics (PBS) on Thursday showed.

However, on a monthly basis, CPI surged 2.1% in July 2024 as compared to an increase of 0.5% in the previous month and an increase of 3.5% in July 2023.

The inflation figures came in cooler than the MG Research's expectations, as well as the Finance Ministry's forecast.

The inflation pace slowed in July amid a fall in electricity charges compared to last month.

The decline came as Prime Minister Shehbaz Sharif announced a Rs50 billion relief package for domestic electricity consumers using up to 200 units per month for three months until October.

Overall housing and energy costs rose just 0.07% from last month. However, costs soared 25.3% from a year ago.

Food costs rose slightly by 1.6% while transport prices jumped 12.2% from last year.

Earlier this week, the State Bank of Pakistan (SBP) lowered its key policy rate by another 100 basis points to 19.5%. The reduction was the second in a row, bringing the total decrease since June 2024 to 250bps.

The average core inflation, measured by non-food non-energy, rose 13.8% YoY in July 2024 as compared to an increase of 14.1% YoY in the previous month and an increase of 20.9% YoY in July 2023.

On a monthly basis, average core CPI increased 0.9% in July 2024 as compared to an increase of 0.7% in the previous month and an increase of 1.2% in July 2023.

With the CPI-based inflation rate at 11.1% and the policy rate at 19.5%, the real interest now stands at 8.4%.

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