Islamabad, September 2, 2024 – The headline inflation rate in Pakistan, measured by the Consumer Price Index (CPI), recorded its lowest level in 34 months in August 2024, according to data released by the Pakistan Bureau of Statistics (PBS) on Monday.
Analysts at Arif Habib Limited noted that the headline inflation rate fell to 9.6% in August 2024, marking the lowest level since October 2021. This represents a significant decrease from the previous month’s year-on-year (YoY) rate of 11.1%. The current inflation rate also sharply contrasts with August 2023, when it was significantly higher at 27.4%.
With this reduction, the average yearly inflation for the first two months of the fiscal year 2025 (2MFY25) stands at 10.4%, a considerable drop from the 27.8% recorded in the same period of the previous fiscal year (2MFY24).
The data from PBS further revealed a breakdown of CPI inflation by urban and rural areas. Urban CPI inflation increased to 11.7% on a YoY basis in August 2024, down from 13.2% in the previous month and significantly lower than the 25.0% recorded in August 2023. On a month-on-month (MoM) basis, urban inflation saw a modest increase of 0.3% in August 2024, compared to a 2.0% rise in the previous month and a 1.6% increase in August 2023.
Meanwhile, rural CPI inflation showed a similar downward trend, rising to 6.7% on a YoY basis in August 2024, compared to 8.1% in the previous month and 30.9% in August 2023. On a MoM basis, rural inflation increased by 0.6% in August 2024, following a 2.2% rise in the previous month and a 1.9% increase in August 2023.
The Sensitive Price Indicator (SPI), which reflects weekly changes in the prices of essential items, also saw a decline. SPI inflation increased by 10.8% on a YoY basis in August 2024, down from 15.7% in July 2024 and 27.9% in August 2023. On a MoM basis, SPI inflation decreased by 0.3% in August 2024, compared to a 2.0% increase in July and a 4.1% rise in August 2023.
The Wholesale Price Index (WPI), which tracks changes in the price of goods at the wholesale level, reported an inflation rate of 6.3% on a YoY basis in August 2024, down from 10.4% in the previous month and 24.3% in August 2023. On a MoM basis, WPI inflation increased slightly by 0.3% in August 2024, compared to a 2.3% rise in July 2024 and a 4.2% increase in August 2023.
Core inflation, which excludes volatile food and energy prices, also showed signs of easing. The core inflation rate measured by the non-food non-energy urban index increased to 10.2% on a YoY basis in August 2024, compared to 11.7% in the previous month and 18.4% in August 2023. On a MoM basis, it increased by 0.4% in August 2024, down from 0.7% in July and 1.8% in August 2023. In rural areas, core inflation rose to 14.4% YoY in August 2024, compared to 16.9% in July and 25.9% in August 2023, with a MoM increase of 0.6% in August 2024, down from 1.1% in July and 2.8% in August 2023.
Core inflation measured by the 20% weighted trimmed mean also showed a decline. For urban areas, the YoY rate increased to 8.0% in August 2024, compared to 10.3% in August 2023. On a MoM basis, it increased by 0.2% in August 2024, compared to 1.2% in the previous month and 1.5% in August 2023. In rural areas, core inflation on a YoY basis rose to 9.6% in August 2024, compared to 11.3% in the previous month and 30.5% in August 2023, with a MoM increase of 0.4% in August 2024, down from 1.7% in July and 1.4% in August 2023.
The latest data reflects a significant easing of inflationary pressures in Pakistan, providing a welcome relief to consumers and policymakers alike. However, analysts caution that ongoing economic challenges and external factors could influence inflation trends in the coming months.
