Pakistan inflation eases to 9-year low of 2.4% in January

Pakistan's inflation as measured by the Consumer Price Index (CPI) softened to 2.4% in January compared to the same month last year, data released by the Pakistan Bureau of Statistics (PBS) on Monday.

The figure is the lowest in over nine years and even lower than market expectations of 3%.

This means the country's real interest rate, which is the benchmark interest rate minus inflation, stands at 9.6%. This gives the central bank room to cut the interest rate further from 12% at present.

The State Bank of Pakistan (SBP) has reduced its inflation projections from earlier 11.5-13.5% to 5.5-7.5% in fiscal year 2024-25 (FY25). The estimates were revised down due to favorable supply side dynamics and moderate domestic demand conditions alongside favorable base effect.

PBS data showed that inflation rose 0.2% compared to December.

Core inflation, which measures non-food and non-energy inflation, eased to 7.8% in urban areas and 10.4% in rural areas compared to 8.1% and 10.7%, respectively, in Jan 2024.

During the first seven months of FY25, inflation was recorded at 6.5% compared to 28.7% during the same time last year.