PkRevenue.com – In a notable shift, the headline inflation based on the Consumer Price Index (CPI) has contracted to a 29-month low, reaching 11.8 percent in May 2024. This development, reported by the Pakistan Bureau of Statistics (PBS), signifies a substantial decrease from the 17.3 percent recorded in the previous month and an even more dramatic drop from the 38.0 percent observed in May 2023.
The month-on-month analysis reveals a similar trend, with CPI inflation decreasing to -3.2 percent in May 2024, compared to a slight decrease of 0.4 percent in April 2024 and an increase of 1.6 percent in May 2023. These figures suggest a significant easing of inflationary pressures, marking a period of relative price stability.
Urban vs. Rural Inflation
The breakdown between urban and rural areas shows distinct variations in inflation trends. Urban CPI inflation increased to 14.3 percent on a year-on-year basis in May 2024, down from 19.4 percent in April 2024 and 35.1 percent in May 2023. On a month-on-month basis, urban inflation decreased to -2.8 percent in May 2024, following a marginal decrease of 0.1 percent in April 2024 and a rise of 1.5 percent in May 2023.
In contrast, rural CPI inflation saw a year-on-year increase to 8.2 percent in May 2024, significantly lower than the 14.5 percent recorded in April 2024 and the 42.2 percent in May 2023. The month-on-month rural inflation decreased more sharply to -3.9 percent in May 2024, compared to a decrease of 0.9 percent in April 2024 and a rise of 1.7 percent in May 2023.
Sensitive Price Indicator (SPI) and Wholesale Price Index (WPI)
The Sensitive Price Indicator (SPI), which tracks the prices of essential items, also mirrored the overall declining trend. Year-on-year, SPI inflation increased to 15.3 percent in May 2024, down from 21.6 percent in April 2024 and 43.0 percent in May 2023. Month-on-month, the SPI dropped by 4.0 percent in May 2024, a sharper decrease compared to the 0.7 percent decline in April 2024 and a 1.3 percent rise in May 2023.
The Wholesale Price Index (WPI), reflecting price changes at the wholesale level, saw year-on-year inflation rise to 9.9 percent in May 2024, from 13.9 percent in April 2024 and 32.8 percent in May 2023. On a month-on-month basis, WPI inflation decreased by -2.5 percent in May 2024, following a decrease of 0.7 percent in April 2024 and an increase of 1.0 percent in May 2023.
Core Inflation Measures
Core inflation, which excludes volatile food and energy prices, showed varying trends in urban and rural areas. Non-food non-energy (NFNE) urban inflation rose to 12.3 percent year-on-year in May 2024, down from 13.1 percent in April 2024 and 20.0 percent in May 2023. Month-on-month, it increased by 0.4 percent in May 2024, compared to a 2.1 percent rise in April 2024 and a 1.2 percent increase in May 2023.
For rural areas, NFNE inflation increased to 17.0 percent year-on-year in May 2024, down from 19.3 percent in April 2024 and 26.9 percent in May 2023. On a month-on-month basis, rural NFNE inflation rose by 0.5 percent in May 2024, compared to a 2.0 percent increase in April 2024 and a 2.5 percent rise in May 2023.
Trimmed Mean Core Inflation
Trimmed mean core inflation, which offers a more stable measure by excluding the most volatile price changes, also showed a downward trend. Urban trimmed mean inflation increased to 11.0 percent year-on-year in May 2024, down from 13.4 percent in April 2024 and 30.5 percent in May 2023. Month-on-month, it decreased by -0.5 percent in May 2024, compared to a 0.5 percent rise in April 2024 and a 1.5 percent increase in May 2023.
Rural trimmed mean inflation rose to 10.6 percent year-on-year in May 2024, from 15.0 percent in April 2024 and 38.8 percent in May 2023. On a month-on-month basis, it decreased to -0.9 percent in May 2024, following a 0.6 percent increase in April 2024 and a 2.0 percent rise in May 2023.
The significant drop in CPI inflation to 11.8 percent in May 2024 indicates a period of stabilization in Pakistan’s economy. This decline across various measures of inflation suggests that inflationary pressures are easing, providing some relief to consumers and policymakers alike.
