Pakistan’s inflation rate hit a remarkable milestone in November 2024, dropping to 4.9%, the lowest level recorded in six years, according to the Pakistan Bureau of Statistics (PBS). This sharp decline has bolstered optimism for further interest rate cuts by the State Bank of Pakistan (SBP), fueling hopes of economic relief for businesses and consumers alike.
The 4.9% inflation rate represents a significant drop from the 7.2% recorded in October and a dramatic fall from the staggering 29.2% in November 2023. This decline continues a trend of easing inflation following the historic high of 38% last year. The improved figures have been attributed primarily to declining food and transport costs, offering a glimmer of hope for the country’s struggling economy.
The PBS data highlighted a 0.5% month-on-month (MoM) increase in inflation for November, down from the 1.2% rise seen in October. Despite this slight uptick, the overall downward trajectory reflects a stabilizing economic landscape.
Food prices showed mixed trends across urban and rural areas. In cities, items such as tomatoes, eggs, pulse moong, and potatoes saw noticeable price hikes. Similarly, rural areas experienced increases in tomatoes, eggs, pulse moong, and cooking oil. However, the consistent easing of inflationary pressures on other commodities has contributed to the overall decrease in the inflation rate. Non-food items, including footwear and personal services, also experienced slight price increases.
The decline in inflation has been further supported by a stable exchange rate and a high base effect, with economists predicting that inflation will remain subdued in the coming months. This stabilization aligns with the SBP’s medium-term target of maintaining inflation between 5% and 7% by September 2025.
The easing inflation has renewed expectations for a policy shift by the central bank. Analysts anticipate that the SBP is likely to announce another rate cut at its upcoming monetary policy meeting on December 16, 2024. This could mark a departure from its cautious stance in recent months, where the focus remained on maintaining macroeconomic stability.
The central bank has previously refrained from aggressive monetary easing to balance economic recovery with the need to control inflation. With the latest data signaling a significant drop in price pressures, experts believe the SBP now has room to lower interest rates further, providing relief to businesses and stimulating economic activity.
The latest developments have sparked cautious optimism in Pakistan’s economic circles. A continuation of this downward trend in inflation, coupled with proactive measures from the central bank, could pave the way for sustainable economic recovery. As the December policy meeting approaches, all eyes are on the SBP to see how it leverages this opportunity to support growth while maintaining long-term stability.
This historic dip in inflation marks a critical moment for Pakistan, signaling the potential for economic turnaround and a brighter future for its citizens.
