In a notable economic shift, the Pakistan Bureau of Statistics (PBS) reported a drop in the annual consumer price inflation rate to 9.6% in August, marking the first single-digit rate in almost three years.
This represents a significant improvement from July’s 11.1%.
Inflation had been high, exceeding 20% since May 2022 and peaking at 38% last May during IMF bailout reforms. The Ministry of Finance had projected August inflation to be between 9.5% and 10.5%, with further decreases anticipated in September.
Prime Minister Shehbaz Sharif lauded the drop in inflation and the upgrades in Pakistan’s credit ratings by Fitch and Moody’s, attributing these advancements to improved macroeconomic conditions.
In August, the Consumer Price Index (CPI) rose by 0.4% month-on-month, a decrease from July’s 2.1% increase. Year-on-year, CPI inflation in urban areas was 11.7%, down from 13.2% in July and 25.0% in August 2023, while rural areas saw a decline to 6.7% from 8.1% last month and 30.9% a year ago.
The Sensitive Price Indicator (SPI) inflation also fell to 10.8% year-on-year, down from 15.7% in July, and decreased month-on-month to 0.3% from 2.0%.
Month-on-month price increases were notable for food items like onions, chicken, and fresh vegetables, while non-food items saw significant rises in motor vehicle tax and stationery. Year-on-year, gas charges, motor vehicle tax, and dental services experienced notable price hikes.