Pakistan’s inflation eases to 11.8% in May, lowest in 30 months

Karachi: The rate of inflation in Pakistan for May 2024 eased to 11.8% year-on-year basis, data from the Pakistan Bureau of Statistics (PBS) revealed on Monday, the lowest since November 2021 and below the finance ministry’s projections.

Pakistan has recorded inflation above 20% since May 2022. In May 2023, the rate of inflation jumped as high as 38% as the South Asian country navigated a tricky path to economic recovery, undertaking painful reforms as part of an International Monetary Fund bailout program.

On a month-on-month basis, the inflation rate decreased 3.2% in May 2024 compared to a decrease of 0.4% in April 2024, and an increase of 1.6% in May 2023, as per data by the Pakistan Bureau of Statistics (PBS).

“CPI for the month of May 2024 clocked in at 11.8% YoY, lowest inflation since November 2021,” Muhammad Sohail, CEO of Topline Securities, said. “Tighter monetary and fiscal policies, record agricultural production in Pakistan and stable currency helped achieve this inflation level.”

Prices of food commodities, including onions, increased by 86.64%, tomatoes by 55.46%, condiments and spices by 39.17% while the price of wheat decreased by 29.06%, wheat flour by 28.48%, and chicken by 22.30% on an annual basis in May 2024, according to data shared by the PBS.

Pakistani analysts hope the easing of the inflation rate in the country to the lowest level in about 30 months, will lead to the central bank easing the country’s monetary policy.

“We continue to believe that soon central bank will cut the interest rate,” Sohail said.

The central bank cumulatively has raised the policy rate by 1500 basis points during FY22 and FY23 and maintained it at 22%, as adjustments in administered energy prices in the backdrop of longstanding structural issues.

In its monthly economic report released last week, Pakistan’s finance ministry said it expected inflation to hover between 13.5% and 14.5% in May and ease to 12.5% to 13.5% by June 2024.