Pakistan's inflation drops to 7.2% in October, lowest in four years

Pakistan's inflation clocked in at 7.2 percent year-on-year in October 2024, marking a slowdown for the first time in almost four years, according to statistics shared by the Pakistan Bureau of Statistics.

Monthly data showed a slight increase from 6.9 percent in September. Nevertheless, inflation has dropped by 19.6 percent from October 2023.

The downward trend has continued for three months, bringing annual inflation to single digits for the first time in nearly four years. The bureau reported that average inflation remained at 8.67 percent over the past three months, the lowest compared to the same period of the previous year.

“Due to the aggressive monetary policy, the SBP achieved the target of bringing inflation below the target of 7 percent ahead of time,” said Mohammad Sohail, CEO of Topline Securities.

Petroleum and electricity prices have been key drivers of inflation in Pakistan, with petrol prices declining by Rs2.07 per litre in the last fortnight of October.

However, high power and fuel costs had previously pushed Pakistan's inflation close to 30 percent in FY23 and 23.4 percent in FY24, which ended on June 30, 2024.

The October inflation reading is lower than official expectations, as the finance ministry had anticipated a further decline in the coming months and expected inflation to hover around 8–9 percent.

The slowing inflation rate has also paved the way for further cuts in the monetary policy rate, which was reduced by 200 basis points last month, bringing it down to 17.2 percent.