August 17, 2024 (MLN): Pakistan's inflation is expected to fall below 10% for the first time in nearly three years as food cost gains ease amid smooth supplies, coupled with high interest rates keeping demand in check.
The slowdown in the pace of price gains is also in part due to the high base from last year.
Annual inflation is expected to fall to 9.5% in August 2024, compared to 11.1% in the last month and 27.4% in August 2023.
This would be the smallest increase since October 2021.
Monthly inflation is projected to rise 0.3% compared to the last 12-month average increase of 0.9%.
Food prices are anticipated to jump 1.2% compared to last month, taking the annual increase to just 2.2%. Chicken prices have likely increased almost 20% compared to July 2024.
Onions, Eggs, Milk, Garlic, and Pulses also cost more. Meanwhile, the prices of tomatoes and staple food items like wheat have fallen.
The housing index is expected to fall 1.6% compared to last month on the back of fuel cost adjustment in electricity bills.
Last month, the government raised energy prices to meet the International Monetary Fund’s conditions for a new loan. However, Prime Minister Shehbaz Sharif provided a Rs50 billion relief package for domestic electricity consumers using up to 200 units per month for three months until October to pause the increase in electricity prices.
Despite the monthly decline, the housing index would still be up 22% from last year driven by the surge in gas and electricity prices compared to August 2023.
It is also the largest contributor to the overall advance in the CPI, with almost half of the inflation advance being driven by this.
Furthermore, the transport index is anticipated to decline by 0.8% MoM amid two consecutive reductions in fuel prices. This would take its yearly advance to 3.3%, the second lowest in all groups.
