Pakistan’s Sept inflation beats projections, clocks at 5.6%

Pakistan’s monthly inflation clocked at 5.6% in September, lower than the expectation as most of the analysts were expecting the rate to be in the range of 6% to 7%.

On a month-on-month basis, the inflation increased by 2% in September as compared to a decrease of 0.6% in the previous month and a decrease of 0.5% in September 2024.

According to the data released by the Pakistan Bureau of Statistics, the inflation rate last month was around 5.6% up from 3% in August and less than 6.9% in September 2024.

The uptick is largely attributed to seasonal increases in wheat, tomato, and onion prices, pushing overall food inflation up by an estimated 4.7% month-over-month.

Early signs of supply disruptions caused by late-monsoon floods in Punjab and Khyber Pakhtunkhwa are also beginning to affect perishable food markets, particularly vegetables.

These disruptions have added short-term inflationary pressure and raised fears about the persistence of food-related price shocks in the coming months.

Data from the Sensitive Price Index (SPI) highlighted sharp increases in key food items in September.

On month of basis items which have impact on overall inflation basket were: Increased: Tomatoes (65.04%), Wheat (37.58%), Wheat Flour (34.43%), Onions (28.48%), Fresh Vegetables (9.03%), Wheat Products (6.86%), Potatoes (5.72%), Eggs (4.49%), Butter (3.55%), Sugar (2.74%) and Rice (2.59%).

The damage to standing cotton and rice crops and disruptions to rural logistics could increase headline inflation and widen the current account deficit through higher food imports, according to a recent assessment by the central State Bank of Pakistan.

It added that the speed of post-flood rehabilitation would be crucial in determining whether these price shocks prove transitory.