Pakistan’s inflation is anticipated to decline further to 7.5% in September, marking a significant decrease from August’s annual rate of 9.6%. This would represent the lowest inflation rate since January 2021.
Monthly inflation rates are expected to remain relatively stable, as reductions in transport and food costs counterbalance increases in electricity prices.
Specifically, transport inflation is projected to decrease by an impressive 6.6% year-over-year, largely due to falling global fuel prices.
In the food sector, prices are expected to drop by 0.4% compared to the previous month, bringing the annual rise to just 0.4%. This decline is likely attributed to an ample supply of key staples, with prices for chicken and wheat reportedly falling.
However, housing inflation continues to present challenges, with an annual increase of 22.5%. The monthly housing index is estimated to rise by 0.8%, driven primarily by higher electricity and gas charges. This sector remains the largest contributor to the overall Consumer Price Index (CPI) increase, accounting for more than half of the inflationary advance.
Looking ahead to October, energy costs are expected to rise further, as the government has adjusted prices to align with the International Monetary Fund’s conditions for a new loan agreement.
Prime Minister Shehbaz Sharif had initially offered a three-month relief period, halting electricity price hikes until October.
As these changes take effect, they could significantly impact future inflation rates, particularly in the housing sector, which is already facing substantial pressures.
