Pakistan inflation drops to 11.8 in May, reinforcing rate cuts hopes
Business
Monetary Policy Committee is scheduled to meet on June 10
- Pakistan Bureau of Statistics attributes the trend to tight monetary and fiscal policies, stable rupee and increased agriculture output
- Food prices see a massive drop
ISLAMABAD (Dunya News/Web Desk) – The consumer price index (CPI) for May was recorded at 11.8 per cent on year-on year basis, showing a drop for the fifth consecutive month, as Pakistan is witnessing a marked easing in inflationary pressure.
At the same time, it is the lowest reading in 30 months and below the finance ministry's projections.
It also means that the businesses can feel more confident of interest rate cuts given that the State Bank of Pakistan’s Monetary Policy Committee is scheduled to meet next week on June 10.
Experts and market are generally very critical of the central bank and the International Monetary Fund (IMF) for sticking to the rigid monetary tightening, which along with a massive rupee devaluation has propelled the cost of doing business to a record high, thus crippling the national economy and worsening the cost of living crisis experienced by an overwhelming majority.
The CPI for December was calculated at 29.7 which declined to 28.3 in January, followed by 23.1 in February, in 20.7 March, 17.3 in April and now 11.8 in May.
Earlier, the CPI had touched a record high in May 2023 by clocking at 38.0pc, as Pakistan is grappling with an economic crisis triggered and sustained by currency devaluation, expensive imports and higher interest rates.
Read more: Pakistan inflation continues easing, May CPI expected to stay below 13.5pc
According to the Pakistan Bureau of Statistics (PBS), which released the latest data, tight monetary and fiscal policies as well as a stable rupee and increased agriculture output has helped arresting inflation.
Meanwhile, the May CPI recorded a 3.2pc decline on month-on-month basis [when compared to April 2024].
Further details show that the urban annual inflation in May stood at 14.3pc which was 19.4pc in the previous month, while there has been a 2.8 month-on-month decline.
Similarly, rural inflation in May when compared to the corresponding month of last year slipped to 8.2pc which was 14.5pc in April. The month-on-month comparison shows a 3.9 reduction.
As for as the food prices are concerned, the annual urban food inflation measured by the CPI in May dropped to 2.2pc which was posted at 11.3pc in April. It decelerated by 6.3pc when compared to the last month.
Meanwhile, the annual rural food inflation witnessed a 0.1pc decline [disinflation] in May and a bigger 7.4pc reduction on month-on-month basis.
However, the non-food component of CPI is still high and recorded at 23.6pc in May on year-on-year basis in urban areas. It was 25.6pc last month. But it also witnessed disinflation at a rate of 0.4pc when compared to April.
In the case of rural areas, the CPI for non-food items eased to 17.2pc when compared to the same month last year. However, it declined by 0.4pc on month-on-month basis.
