Annual inflation slowed to 4.1pc in December – lowest in above 6 years

KARACHI: Pakistan’s consumer inflation rate slowed to 4.1 per cent year on year in December 2024, the statistics bureau said on Wednesday, the lowest in more than 6-1/2 years.

The South Asian country is navigating a challenging economic recovery path buttressed by a $7 billion facility from the International Monetary Fund (IMF) granted in September.

Consumer prices in December rose 0.1pc from the month before, according to the Pakistan Bureau of Statistics.

In its monthly report released last week, the finance ministry said that the annual inflation rate was expected to hold in the range of 4-5pc in the final month of the year.

Annual inflation had already slowed to 4.9pc in November, largely due to a high base a year earlier, coming in below the government’s forecast and significantly lower than a multi-decade high of around 40pc in May 2023.

Also Read: How did Pakistan’s economy fare in 2024?

“Inflation has come down on the back of stable currency, lower global commodity prices and improved supply chain,” said Samiullah Tariq, head of research and development at Pak Kuwait Investment Company.

Pakistan’s central bank previously targeted 5-7pc inflation in the medium term but its head has said the level is now in sight within the next 12 months.

The State Bank of Pakistan (SBP) cut its key policy rate by 200 basis points to 13pc in December, the fifth straight reduction since June, to bring cumulative rate cuts for 2024 to 900 basis points and making it one of the most aggressive emerging market central banks in the current easing cycle.

Inflation during the first half of the current fiscal year to end-June 2025 has averaged 7.22pc compared to 28.79pc in the year-earlier period.

Meanwhile, on the last day of 2024, government raised petroleum prices by almost Rs3 per litre while the liquefied petroleum gas (LPG) prices were reduced by Rs4 per kg.  

The per litre prices of petrol and high speed diesel (HSD) was raised by Rs0.56 and Rs2.96, respectively.