Pakistan’s headline inflation for April registered at 17.3% year-on-year, marking a decline from the previous month’s 20.7%. The month-on-month reading also showed a decrease, settling at 0.4%, according to the Pakistan Bureau of Statistics (PBS).
“This marks the lowest inflation rate in the past 23 months (since May 2022),” noted Mohammed Sohail, CEO of brokerage house Topline Securities.
The average inflation from July to April stood at 25.97%, a decrease from the previous year’s 28.23% for the same period.
The reported inflation figure falls below the government’s projections. The Ministry of Finance, in its Monthly Economic Update and Outlook report, forecasted a CPI-based inflation rate of around 18.5-19.5% for April 2024, with expectations of further deceleration in the subsequent months.
The ministry attributed the downward trajectory in inflation to a favorable base effect from the previous year and improvements in the domestic supply chain of essential goods.
The Finance Division indicated that the government is actively implementing stringent administrative measures to curb inflation. It anticipates inflation to remain within the range of 18.5-19.5% in April 2024, with gradual easing expected to continue, reaching 17.5-18.5% by May 2024.
Urban and rural inflation trends differed in April 2024, as reported by the PBS. Urban CPI inflation rose to 19.4% year-on-year, a decrease from the previous month’s 21.9% and significantly lower than April 2023’s 33.5%. On a month-on-month basis, urban inflation decreased to 0.1% in April 2024, contrasting with the 1.4% increase in the previous month and the 2.0% increase in April 2023.
Meanwhile, rural CPI inflation stood at 14.5% year-on-year in April 2024, down from 19% in the previous month and substantially lower than April 2023’s 40.7%. On a month-on-month basis, rural inflation decreased to 0.9% in April 2024, compared to a 2.1% increase in the previous month and a 3% increase in April 2023.
In its recent meeting, the State Bank of Pakistan’s Monetary Policy Committee (MPC) decided to maintain the key policy rate at 22%, marking the seventh consecutive decision to maintain the status quo. The MPC acknowledged the positive impact of macroeconomic stabilization measures on inflation and the external position, amidst a moderate economic recovery.
However, the committee expressed concerns about the persistently high level of inflation, noting global commodity price stability amid ongoing geopolitical uncertainties and forthcoming budgetary measures that may affect near-term inflation outlook. Despite expecting inflation to continue its downward trajectory, the committee recognized potential risks from global oil price volatility, resolution of circular debt in the energy sector, and tax-driven fiscal consolidation in the future.
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