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Pakistan’s Inflation Rate in November 2024 Drops to 6.5 Years Low of 4.9%

Pakistan’s Inflation Rate in November 2024 Drops to 6.5 Years Low to 4.9% YoY

Islamabad: Pakistan’s Inflation Rate in November 2024, measured by the Consumer Price Index (CPI), dropped to 4.9%, marking the lowest level in six and a half years, according to the Pakistan Bureau of Statistics (PBS). This notable decrease brings relief to consumers and is a positive indicator for the country’s economy, which has been grappling with high inflation in recent years.

The November figure is a sharp decline from 7.2% recorded in October and significantly lower than the 29.2% seen in November 2023. On a month-on-month (MoM) basis, inflation rose slightly by 0.5%, a marked slowdown compared to the 1.2% rise in October.

Key Factors of Decline in Pakistan’s Inflation Rate in November 2024

  • Historic Inflation Decline: Pakistan’s annual inflation rate dropped to 4.9% in November 2024, the lowest in 6.5 years, significantly lower than the 29.2% recorded in November 2023.
  • Improved Economic Conditions: The disinflationary trend is driven by better food supply chains, subdued demand, and proactive monetary policy, with average inflation during the first five months of FY2025 at 7.88%, down from 28.62% in FY2024.
  • Monetary Policy Easing: The State Bank of Pakistan (SBP) has cut interest rates by 700 basis points since June 2024, and further reductions are expected, supporting economic recovery and aligning with the medium-term inflation target of 5-7% by September 2025.

نومبر 2024 میں پاکستان کی مہنگائی کی شرح 4.9 فیصد تک گر گئی، جو پچھلے ساڑھے چھ سال کی کم ترین سطح ہے۔ پاکستان بیورو آف شماریات کے مطابق یہ کمی بہتر معاشی حالات، خوراک کی بہتر سپلائی اور مانگ میں کمی کا نتیجہ ہے۔ مالی سال 2025 کے پہلے پانچ مہینوں میں اوسط مہنگائی 7.88 فیصد رہی، جو گزشتہ سال 28.62 فیصد تھی۔ اسٹیٹ بینک آف پاکستان نے جون 2024 سے اب تک شرح سود میں 700 بیسز پوائنٹس کی کمی کی ہے، اور مزید کمی متوقع ہے تاکہ معاشی بحالی کو فروغ دیا جا سکے اور 2025 تک 5-7 فیصد کی مہنگائی کا ہدف حاصل کیا جا سکے۔

A Historic Decline in Pakistan’s Inflation Rate in November 2024

According to Topline Securities, November’s inflation rate is the lowest in 78 months, last seen in April 2018. For the first five months of FY2025 (July-November), the average inflation stood at 7.88%, a dramatic improvement from 28.62% during the same period of FY2024.

inflation rate nov 2024 CPI drops to 79 months low

The disinflationary trend reflects better economic conditions, improved food supplies, and subdued demand. In May 2023, Pakistan experienced a record inflation rate of 38%, driven by global economic challenges and domestic financial instability. Since then, consistent declines in CPI have eased pressures on households and businesses.

It is seen as a significant achievement by the government of Pakistan as inflation drops to 6.5 years low to 4.9%.

Factors Driving the Decline in Pakistan’s Inflation Rate in November 2024

The drop in inflation is attributed to a combination of factors, including:
• Improved food supply chains that stabilized prices of essential commodities.
• Reduced demand pressures, which contributed to easing price hikes.
• Proactive monetary policy measures by the State Bank of Pakistan (SBP).

The Finance Ministry, in its monthly economic report, had projected inflation to be in the range of 5.8% to 6.8% for November. This downward trend is expected to continue in December, with inflation likely to settle between 5.6% and 6.5%. Analysts see Pakistan ifaltion rate 4.9% in nov 2024 as a very good sign for economic recovery.

Impact on Monetary Policy

The decline in inflation has set the stage for potential policy adjustments by the State Bank of Pakistan (SBP). The central bank, which reduced interest rates by 250 basis points earlier in November, is expected to continue its monetary easing trajectory to revive economic activity.

Since June 2024, the SBP has cut its benchmark interest rate by 700 basis points, bringing it to 15% last month. Analysts, including those surveyed by Bloomberg, anticipate the key policy rate to fall further to 13.5% by June 2025, provided inflation remains under control.

Urban and Rural Inflation Breakdown

While the overall inflation rate declined, the prices of several essential items continued to rise:

inflation rate nov 2024 national consumer price index N-CPI

Rural Areas:
• Food items such as Pulse Gram (69.40%), Milk Powder (26.62%), and Meat (22.39%) recorded sharp increases.
• Non-food items like Motor Vehicle Tax (126.61%), Education (22.96%), and Communication Services (18.70%) also rose.

Urban Areas:
• Food items with significant price increases included Pulse Gram (71.94%), Besan (59.13%), and Pulse Moong (36.94%).
• Non-food items like Motor Vehicle Tax (168.79%), Footwear (31.88%), and Dental Services (24.51%) saw notable hikes.

On a month-on-month basis, items such as Tomatoes, Eggs, and Potatoes saw the highest price surges in both urban and rural areas.

Outlook for the Future of Inflation Rate

The consistent decline in inflation has eased economic pressures and bolstered hopes for economic recovery. The upcoming Monetary Policy Committee (MPC) meeting on December 16 is expected to focus on maintaining this momentum by further reducing interest rates.

While the International Monetary Fund (IMF) projects an average inflation rate of 9.5% for 2024, the current trend suggests that Pakistan is on track to achieve the SBP’s medium-term inflation target of 5-7% by September 2025.

Conclusion

The decline in inflation to a 6.5-year low is a positive development for Pakistan’s economy. It not only signals a reduction in consumer hardships but also a potential shift toward sustainable growth and financial stability.

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