Pakistan’s Inflation Rate Eases to 11.8% in May 2024

• Pakistan’s inflation rate dropped to 11.8% in May 2024.
• Inflation has been decreasing for five consecutive months.
• Food inflation in urban areas decreased to 2.2% in May 2024.

In a significant economic development, Pakistan’s monthly inflation rate eased to 11.8% in May 2024 on a year-over-year basis, marking the lowest annual inflation rate in 29 months. This decrease continues a trend of declining inflation, as April 2024 saw a year-over-year Consumer Price Index (CPI) of 17.3%.

Key Factors for the Decline

The consistent drop in inflation for the fifth consecutive month can be attributed to several factors:

• Improved Domestic Food Supplies: Enhanced food supply chains have eased food prices.
• Falling Fuel Costs: A decrease in fuel prices has contributed to lower overall inflation.
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• Central Bank Policies: The State Bank of Pakistan (SBP) has maintained interest rates at a record 22% for nearly a year, a strategic move aimed at curbing inflation.

Food Inflation

Food inflation rates have shown notable decreases:

• Urban Areas: Food inflation dropped to 2.2% in May 2024.
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• Rural Areas: Remarkably, rural food inflation experienced a deflation of -0.1%.

Monetary Policy

To contain inflation, the SBP has kept the policy rate steady at 22%, as decided in the last Monetary Policy Committee meeting on April 29th, 2024. This high-interest rate has been a critical tool in the central bank’s efforts to manage inflationary pressures.

Inflation Trends

The average inflation for the July-May period of FY24 was 24.5%. Additionally, the wholesale price index (WPI) saw a significant decrease, standing at 9.9% year-over-year in May 2024, down from 13.9% in April 2024. This reduction in WPI suggests a potential for further decreases in consumer inflation in the coming months.

Monthly Deflation

On a monthly basis, the National CPI recorded a deflation rate of 3.2% in May 2024. Food inflation rates also showed significant monthly declines:

• Urban Areas: A decrease of 6.3% compared to April 2024.
• Rural Areas: A decrease of 7.4%.

Core Inflation

Excluding energy and food items, core inflation in May 2024 increased by 12.3% in urban areas and 17% in rural areas on a year-over-year basis.

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The continued decline in Pakistan’s inflation rate is a positive sign for the economy, reflecting effective management of food supplies, fuel costs, and monetary policy. As the SBP maintains its stance on interest rates, there is hope for further stabilization of inflation in the coming months.

For detailed updates, stay tuned to economic reports and announcements from the State Bank of Pakistan.