In July 2021, Pakistan experienced a notable shift in inflationary trends, with the headline inflation based on the Consumer Price Index (CPI) registering at 8.4 percent year-on-year, down from 9.7 percent in June 2021.
The latest data from the Pakistan Bureau of Statistics (PBS) reveals a month-on-month increase of 1.3 percent, contrasting with the previous month’s 0.2 percent decrease and indicating a shift in economic dynamics.
Breaking down the figures, urban areas saw a year-on-year CPI inflation increase of 8.7 percent in July 2021, compared to 9.7 percent in June and 7.8 percent in July 2020. On a month-on-month basis, urban CPI increased by 1.29 percent in July 2021, a positive turn from the 0.4 percent decrease in the previous month.
Similarly, rural areas witnessed a year-on-year CPI inflation of 8.0 percent in July 2021, down from 9.7 percent in June 2021. On a month-on-month basis, rural CPI increased by 1.4 percent in July 2021, reversing the 0.06 percent decrease in the previous month.
The Sensitive Price Indicator (SPI) inflation recorded a year-on-year increase of 16.2 percent in July 2021, showing signs of moderation from the 17.6 percent increase in the previous month. On a month-on-month basis, SPI increased by 1.8 percent in July 2021, a shift from the 0.4 percent decrease observed a month earlier.
Furthermore, the Wholesale Price Indicator (WPI) inflation reflected a year-on-year increase of 17.3 percent in July 2021, down from the 20.9 percent increase in June 2021. On a month-on-month basis, WPI increased by 2.3 percent in July 2021, compared to a 0.9 percent increase in the previous month.
These figures suggest a positive trend in inflation moderation, hinting at improved economic stability. The year-on-year reductions in both headline and core inflation indicate a relative easing of price pressures compared to previous months. The month-on-month increases, particularly in urban and rural CPI, highlight a potential recovery in consumer spending and economic activity.
While the data indicates signs of improvement, policymakers will likely remain vigilant to ensure sustained economic recovery and address any potential challenges. As the country navigates these economic dynamics, attention will be focused on policies that promote stable prices, sustainable growth, and overall economic resilience. The moderation in inflationary pressures provides a glimmer of optimism for Pakistan’s economic outlook in the coming months.
