Pakistan’s Inflation Drops to 4.9% in November, Reaches Lowest Level in 6 Years

Pakistan’s Inflation

Pakistan’s inflation rate slowed to 4.9% in November 2024, marking the lowest level since April 2018, according to the latest data from the Pakistan Bureau of Statistics (PBS).

This decrease provides some relief to consumers who have been grappling with high inflation in recent years. The current inflation rate is well within the central bank’s target range of 5-7%, offering a hopeful outlook for the future.

Compared to October 2024, when inflation stood at 7.2%, the November figure represents a significant decline.

Additionally, the inflation rate for November 2024 is drastically lower than the 29.2% recorded in the same month last year, indicating a notable improvement. Although market expectations had anticipated a slight dip to 4.7%, the actual inflation rate was recorded at 4.9%, a marginal difference.

The average yearly inflation for the first five months of FY25 stands at 7.94%, a sharp drop from the 28.62% recorded during the same period in FY24.

On a monthly basis, the consumer price index (CPI) rose by 0.5% in November, compared to 1.23% in October 2024 and 2.7% in November 2023. This indicates a more gradual increase in prices over the past month, offering a glimmer of hope that inflation may continue to stabilize.

However, while overall inflation has eased, core inflation remains elevated. Core inflation, which excludes volatile food and energy prices, increased by 8.9% year-on-year in November, up slightly from 8.6% in October 2024.

This still represents a significant improvement compared to the 18.6% rise seen in November 2023. On a monthly basis, core inflation rose by 1.2%, surpassing the 0.6% increase from the previous month.

A notable disparity in inflation rates was observed between urban and rural areas. Inflation in urban areas stood at 5.2%, while in rural areas, it was lower at 4.3%. This disparity highlights the different economic pressures faced by urban and rural populations.

While inflation has eased overall, some essential items continue to experience price hikes. The prices of tomatoes, eggs, lentils, moong, honey, and potatoes saw an uptick in November, continuing a trend from previous months.

In addition, items like ghee, butter, dry fruits, fish, and cooking oil have become more expensive, further straining household budgets.

In the clothing sector, prices increased by 14.37% year-on-year, while health and education costs also rose significantly by 13% and 10.55%, respectively. These increases in non-food inflation continue to place pressure on consumers.

Despite the decline in overall inflation, the policy rate remains high at 15%, and with CPI-based inflation at 4.86%, the real interest rate stands at 10.14%, a positive sign for savers. This suggests that the central bank’s monetary tightening measures are having some effect in curbing inflationary pressures.

Looking ahead, while the easing of inflation is encouraging, analysts caution that high core inflation remains a challenge.

Continued supply-side interventions and fiscal measures will be crucial in maintaining this downward trend in inflation, while addressing the persistent pressures on essential goods and services.