Pakistan’s inflation drops to 44-month low of 6.9% in September

Pakistan inflation fell to its lowest level since January 2021, strengthening the case for another interest rate cut next month.

Pakistan inflation eased slightly more than forecast to 6.9% in September, data issued by Pakistan Bureau of Statistics (PBS) showed.

“Due to aggressive monetary tightening, SBP has achieved in bringing inflation below 7% one year ahead of target,” Mohammed Sohail, CEO of Topline Securities noted in a message.

Urban inflation decreased to 9.3%, down from 11.7% in the previous month and significantly lower than the 29.7% recorded in September 2023.

Similarly, rural inflation dropped to 3.6% in September 2024, compared to 6.7% in the previous month and 33.9% in September 2023.

The central bank has already reduced benchmark rate by 450bps over the last three MPC meetings.

As inflation readings continue to ease and real rates hovering 10.5% mark, analysts anticipate further 100 bps cut in the policy rate at the upcoming MPC meeting scheduled for November 2024.

Analysts believe that headline inflation will further decline and is expected to reach its lowest point in January 2025.

State Bank of Pakistan (SBP) has viewed a possibility of FY25 average inflation falling below the earlier forecast range of 11.5 – 13.5 percent. However, this assessment is contingent on achieving the targeted fiscal consolidation and timely realization of planned external inflows.