Karachi, October 1, 2024 – Pakistan’s headline inflation, measured by the Consumer Price Index (CPI), plunged to a multi-year low of 6.9% in September 2024, according to data released by the Pakistan Bureau of Statistics (PBS) on Tuesday.
This sharp decline marks a significant shift from the double-digit inflationary pressures experienced throughout the past year, offering relief to consumers and policymakers alike.
The PBS reported that CPI inflation for September 2024 fell to 6.9% year-on-year (YoY), a notable decrease from 9.6% in August 2024 and an even steeper drop from the 31.4% recorded in September 2023. On a month-on-month (MoM) basis, inflation decreased by 0.5%, contrasting with the 0.4% increase seen in the previous month. In September 2023, the MoM increase stood at 2.0%, highlighting the scale of this year’s moderation.
Urban and Rural Inflation Breakdown
Urban inflation followed a similar trend, declining to 9.3% YoY in September 2024, compared to 11.7% in August 2024 and a staggering 29.7% in September 2023. On a MoM basis, urban inflation fell by 0.5%, a marked improvement from the 0.3% increase observed in the previous month and the 1.7% rise in September 2023.
Rural inflation exhibited an even more pronounced drop, reaching 3.6% YoY in September 2024, down from 6.7% in the previous month and 33.9% in September 2023. On a MoM basis, rural inflation decreased by 0.5%, a reversal from the 0.6% increase seen in August 2024 and the 2.5% rise recorded in the same month last year.
Sensitive Price Indicator (SPI) and Wholesale Price Index (WPI)
The Sensitive Price Indicator (SPI), which tracks prices of essential goods, also showed a YoY decrease, falling to 9.2% in September 2024 from 10.8% in August 2024 and 32.0% in September 2023. On a MoM basis, however, SPI inflation edged up by 0.2%, a slight increase from the 0.3% decline in August 2024, though still lower than the 1.7% rise recorded in September 2023.
Wholesale Price Index (WPI) inflation, a measure of price changes at the producer level, also saw a significant YoY decrease, dropping to 1.9% in September 2024 from 6.3% in the previous month. This contrasts starkly with the 26.4% YoY increase in WPI inflation recorded in September 2023. On a MoM basis, WPI inflation decreased by 1.1%, following a 0.3% rise in August 2024 and a 3.1% increase in September 2023.
Non-Food, Non-Energy Inflation
Inflation excluding food and energy prices—considered core inflation—also showed signs of moderation. Urban core inflation declined to 9.3% YoY in September 2024, down from 10.2% in August 2024 and 18.6% in September 2023. On a MoM basis, it increased slightly by 0.2%, compared to the 0.4% rise in the previous month.
In rural areas, core inflation dropped to 12.1% YoY in September 2024, from 14.4% in the previous month and 27.3% in September 2023. On a MoM basis, it rose by 0.5%, mirroring the previous month’s increase but still significantly lower than the 2.6% increase recorded in September 2023.
Trimmed Mean Inflation
The 20% weighted trimmed mean inflation, which removes extreme price movements to provide a more stable measure of inflation, also demonstrated improvement. In urban areas, it decreased to 7.1% YoY in September 2024, down from 8.0% in August 2024 and 25.0% in September 2023. In rural areas, trimmed mean inflation dropped to 7.4% YoY, from 9.6% in August 2024 and 33.3% in September 2023.
Economic Implications
The sustained decline in inflation marks a positive development for Pakistan’s economy, which has been grappling with high inflation rates due to external factors, including global supply chain disruptions and volatile commodity prices. The sharp drop to 6.9% could ease the pressure on households and provide the government with greater flexibility in managing monetary policy to support economic recovery. However, analysts caution that the potential for external shocks, such as rising global oil prices, could still pose a threat to the inflation outlook.
