KARACHI: The Pakistan Bureau of Statistics (PBS) reported on Monday that the country’s inflation rate for May 2024 fell to 11.8% year-on-year, marking the lowest level since November 2021 and beating the finance ministry’s predictions.
Since May 2022, Pakistan has experienced inflation rates above 20%. In May 2023, inflation soared to 38% as the nation grappled with economic recovery and implemented challenging reforms under an International Monetary Fund (IMF) bailout program.
On a month-to-month basis, the inflation rate declined by 3.2% in May 2024, compared to a 0.4% decrease in April 2024 and a 1.6% increase in May 2023, according to PBS data.
“May 2024’s Consumer Price Index (CPI) at 11.8% year-on-year is the lowest inflation rate since November 2021,” said Muhammad Sohail, CEO of Topline Securities. “The combination of stringent monetary and fiscal policies, record agricultural output, and a stable currency contributed to this achievement.”
The PBS data revealed significant price changes in food commodities: onions surged by 86.64%, tomatoes by 55.46%, condiments and spices by 39.17%, while wheat prices dropped by 29.06%, wheat flour by 28.48%, and chicken by 22.30% on an annual basis in May 2024.
Pakistani analysts are optimistic that the substantial reduction in inflation, reaching the lowest level in approximately 30 months, will prompt the central bank to relax its monetary policy.
“We anticipate that the central bank will soon reduce the interest rate,” Sohail added.
The central bank had previously raised the policy rate by a cumulative 1500 basis points during FY22 and FY23, maintaining it at 22%, due to necessary adjustments in administered energy prices amidst long-standing structural challenges.
In its latest monthly economic report, Pakistan’s finance ministry projected that inflation would remain between 13.5% and 14.5% in May and decrease to between 12.5% and 13.5% by June 2024.
