Islamabad, November 1, 2024 – Pakistan’s headline inflation, as gauged by the Consumer Price Index (CPI), surged to 7.2% on a year-on-year basis in October 2024, up from 6.9% in September. This increase, while marginal, underscores an emerging inflationary trend following the more extreme inflationary environment of 2023, which saw a dramatic 26.8% rise in prices year-on-year in October.
On a month-on-month basis, the CPI registered a 1.2% increase in October, reversing a 0.5% decline in September. This shift is part of a broader pattern in which prices, although stabilizing relative to last year’s highs, are now experiencing renewed pressures, potentially signaling further inflationary concerns as the year closes.
Urban and Rural CPI Inflation Dynamics
Inflationary pressures were split unevenly across Pakistan’s urban and rural areas. CPI inflation in urban regions remained stable at 9.3% year-on-year in October, unchanged from September but still elevated compared to the historical levels seen prior to the inflationary surge in 2023, which saw a 25.5% annual increase in October. Month-on-month, urban inflation climbed by 1.1%, reversing the previous month’s 0.5% decline.
In contrast, rural inflation displayed a marked acceleration. Year-on-year inflation in rural areas rose to 4.2% in October from 3.6% in September. Month-on-month rural inflation also recorded a 1.5% increase, a sharper rise than the 1.1% seen in urban areas, suggesting that rural households may be bearing a heightened inflationary burden amid ongoing price adjustments across the country.
Sensitive Price Indicator (SPI) and Wholesale Price Index (WPI) Trends
The Sensitive Price Indicator (SPI), which tracks prices of essential goods, also signaled intensifying price pressures. Year-on-year SPI inflation rose to 9.7% in October, up from 9.2% in September, reflecting the impact of higher essential goods costs on households. On a month-on-month basis, the SPI increased by 0.6%, following a smaller 0.2% rise in the previous month. This incremental increase highlights the persisting pressure on everyday commodities despite broader inflation trends.
The Wholesale Price Index (WPI), which tracks price movements for goods in bulk, also illustrated an upward trajectory, showing a 3.9% year-on-year increase in October compared to 1.9% in September. However, on a month-on-month basis, the WPI remained unchanged, following a 1.1% decline in the prior month. While wholesale prices remain less volatile, this month’s stability could indicate the initial signs of price consolidation in the supply chain.
Core Inflation Metrics Reflect Varied Pressures
Core inflation, which excludes volatile food and energy prices, exhibited divergent patterns in urban and rural areas. Core inflation in urban regions decelerated to 8.6% year-on-year in October, down from 9.3% in September, indicating some easing of non-food and non-energy inflationary pressures. However, month-on-month core inflation in urban areas saw a modest 0.6% rise.
Conversely, rural core inflation reached 11.7% year-on-year in October, reflecting a slight decline from 12.1% in September. On a month-on-month basis, rural core inflation rose by 0.7%, mirroring the inflationary pressures evident in the broader rural CPI.
The trimmed mean core inflation measure, calculated using a 20% weighted index, further indicated moderation. Urban core inflation, by this measure, decreased to 6.4% year-on-year in October from 7.1% in September, while rural core inflation declined to 7.2% from 7.4%.
Outlook: Persistent Inflationary Pressures
The gradual uptick in headline inflation underscores persistent inflationary pressures in Pakistan despite a relative slowdown from 2023’s peak levels. Economic analysts suggest that this inflationary trend may continue through the end of the year as global commodity prices and supply chain constraints impact the domestic market. As policymakers monitor these indicators, the coming months will be critical in determining whether Pakistan’s inflation trajectory stabilizes or requires further intervention to manage.
