Pakistan’s consumer price inflation has seen a decline for the second consecutive month, reaching its lowest level since June 2022, according to official data released on Friday.
The Pakistan Bureau of Statistics (PBS) reported that consumer prices rose by 23.06% year-on-year in February, down from 28.34% in January. This decline was attributed to a decrease in food prices, which make up more than a third of the consumer basket. Food inflation slowed to 18.15% in February, reflecting improved supplies of perishable items and softer commodity prices.
Transport and housing costs also saw a slower increase in February, while education and health expenses rose slightly faster.
Brokerage firm Arif Habib Limited (AHL) noted, “This is the lowest inflation reading since June 2022.” On a month-on-month basis, consumer prices edged up by 0.25% in February, compared to 1.85% in January.
The easing inflation provides some relief to the central bank, which has maintained its policy rate at 22% for the fifth consecutive meeting in January to combat soaring inflation and a widening current account deficit. The next monetary policy announcement is scheduled for March 18.
The central bank anticipates inflation to trend lower in the coming months, with the strengthening of the rupee in 2024 and the diminishing impact of utility price hikes. The projected average inflation for the fiscal year ending in June 2024 is in the range of 24% to 25%.
As part of the conditions under the International Monetary Fund (IMF) program ending in April, the government has increased energy prices and taxes. The cooling inflation is crucial for negotiating a new IMF loan, with the new administration seeking at least $6 billion to avert an economic crisis and repay looming debts.
Official data reveals that food costs rose 18.15% year-on-year in February, compared to 24.96% the previous month. Transport prices climbed by 15%, and housing costs increased by 36.08%. The average inflation from July to February remained at 27.96%, compared to 26.19% in the same period the previous year.
Urban inflation in February 2024 increased by 24.9% year-on-year, a decrease from 30.2% in the previous month and 28.8% in February 2023. On a month-on-month basis, it rose by 0.2% in February 2024.
Rural inflation stood at 20.5% year-on-year in February 2024, down from 25.7% the previous month and 35.6% in February 2023. On a month-on-month basis, it decreased to 0.3% in February 2024.
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