Pakistan’s headline inflation clocked in at 4.1% on a year-on-year basis in December 2024, a reading that was also below that of November 2024 when it stood at 4.9%, showed Pakistan Bureau of Statistics (PBS) data on Wednesday.
On a month-on-month basis, CPI increased by
0.1% in December 2024 as compared to 0.5% in the previous month and an increase of 0.8% in
December 2023.
This is the “lowest reading in 81 months,” said Topline Securities.
CPI inflation average during 6MFY25 stood at 7.22% as compared to 28.79% in 6MFY24.
The reading in December is also in line with official expectations.
In its monthly outlook released on Friday, the finance ministry stated that it expected inflation to stay within the 4-5% range in December.
In its ‘Monthly Economic Update and Outlook’, the ministry highlighted that the “hard-earned” economic stability is expected to persist on the back of remittances and export inflows with decent imports.
“This will be complemented with exchange rate stability and contained inflation – which is anticipated to remain within the range of 4.0- 5.0% for December 2024,” read the report.
Inflation in Pakistan has been a significant and persistent economic challenge, particularly in recent years. In May of last year, the CPI inflation rate hit a record high of 38%. However, it has been on a downward trajectory since then.
The declining inflation trajectory also gives impetus to a further cut in the key policy rate.
Last month, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) decided to cut the policy rate by 200 bps to 13%. Cumulatively, the policy rate reduced by 900 bps since June during the last five consecutive monetary policy decisions.
Meanwhile, the latest CPI reading was in line with the projections made by several brokerage houses.
Topline Securities expected inflation reading to clock in at around 4-4.5% in December.
“Pakistan inflation in 2024 fell to average of 13% in 2024 with Dec 2024 inflation expected in range of 4-4.5%,” it said.
“Inflation in 2025 is expected to further come down to average of 7-8%.”
JS Global projected CPI to fall to 4% in December.
“Following a 4.9% reading in Nov-2024, the Consumer Price Index (CPI) is expected to drop to 4% in Dec-2024, marking a 6.5-year low continuing Pakistan’s current sharp disinflation trend,” stated the report.
Urban, rural inflation
The PBS said CPI inflation urban decreased to 4.4% on year-on-year basis in December 2024 as compared to 5.2% in the previous month and 30.9% in December 2023.
On month-on-month basis, it decreased by 0.1% in December 2024 as compared to 0.5% in the previous month and an increase of 0.7% in December 2023.
CPI inflation rural decreased to 3.6% on year-on-year basis in December 2024 as compared to 4.3% in the previous month and 27.9% in December 2023.
On a month-on-month basis, it increased by 0.3% in December 2024 as compared to 0.5% in the previous month and an increase of 1% in December 2023.
American Dollar Exchange Rate