Lower freight costs may help ease Pakistan inflation further

Pakistan's inflation may decline further in the coming months due to a recent reduction in freight costs, analysts told Nukta on Thursday.

The average cost of a 20 feet container with imports from Shanghai has come down to $1,000 from $3,500 since July. Sources from freight forwarding business told Nukta that shipping lines have ample space due to a slowdown in Chinese economy, which resulted in a decline in freight costs.

Similarly, the cost of a 20 feet container with imports from Hamburg, Germany has declined to $1,200 from $2,200 in July.

Since Pakistan is an import-dependent country and has to purchase petroleum products, pulses and chemicals, etc from abroad, analysts believe the cut in freight costs will play a key role in slashing the landed cost of merchandise. This will, in turn, help reduce inflation.

Meanwhile, traders said that freight costs constitute 25% of a product's price. Thus, lower freight costs would result in lower rates of different products.

However, the freight prices of outbound shipments have shown no sign of retreat, they added.

Pakistan's inflation eased to 9.6% in August this year compared to the same month last year, marking the first time inflation fell in the single-digit range in three years.