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Inflation hits 44-month low, outperforming projections


September inflation

ISLAMABAD: Pakistan’s inflation rate has dropped to its lowest level in over three and a half years, as Consumer Price Index (CPI)-based inflation decreased to 6.9 per cent year-on-year in September 2024.

This significant dip, the lowest since January 2021, surpasses official predictions, which had anticipated inflation to remain between 8 to 9 per cent in September and October, according to the Pakistan Bureau of Statistics (PBS).

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On a month-on-month basis, inflation fell by 0.5 per cent in September, reversing the 0.4 per cent increase witnessed in August.

The reduction in inflation from 9.6 per cent in August – in single digits after almost three years – to 6.9 per cent in September is being attributed to a combination of factors. Economists point to a high base effect from last year’s elevated prices, a stabilising exchange rate, and declines in commodity and energy prices as primary contributors to this trend.

The deceleration in inflation aligns with predictions from analysts who cited currency stability and easing global commodity prices as key factors. These developments present a stronger case for the State Bank of Pakistan (SBP) to continue easing its monetary policy.

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The SBP has already reduced its key policy rate by 200 basis points to 17.5 per cent in September, marking the third consecutive cut since June. Analysts expect further reductions in interest rates if the disinflationary trend continues, providing room for the central bank to support economic growth while keeping inflation under control.

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