In November 2024, Pakistan’s Consumer Price Index (CPI) inflation recorded a significant decline, reaching 4.9% on a year-over-year (YoY) basis. This marked a sharp reduction from the 7.2% inflation rate observed in October 2024 and a dramatic drop from the 29.2% inflation recorded in November 2023. On a month-over-month (MoM) basis, CPI inflation increased by 0.5% in November 2024, compared to a 1.2% rise in the previous month and 2.7% in November 2023. This continued downward trend in inflation signals an improvement in the country’s price stability, offering some relief to consumers who have been grappling with high inflation over the past year.
The major drivers behind the YoY increase in CPI were primarily related to clothing and footwear, health, communication, and education, which saw notable price increases. Clothing and footwear inflation rose by 14.37%, while health-related costs increased by 13.06%. Communication and education costs also saw significant hikes of 12.23% and 10.55%, respectively. Other contributing factors included rising costs in restaurants and hotels (8.30%), housing and utilities (7.89%), perishable food items (7.47%), and furnishings and household equipment maintenance (5.91%). Additionally, alcoholic beverages and tobacco saw a 5.43% increase in prices.
However, there were a few categories that saw a decrease in prices compared to the previous year. Non-perishable food items recorded a 1.54% decline in prices, while transport costs dropped by 2.75%. These deflationary trends in specific sectors are contributing factors to the overall reduction in the CPI inflation rate.
In the week ending December 19, 2024, the Sensitive Price Indicator (SPI) saw an increase of 0.38% compared to the previous week. The SPI reflects price changes in essential goods and serves as an indicator of inflationary pressures on low-income households. During this week, the prices of 13 items decreased, 23 items remained stable, and 15 items experienced price hikes. The overall increase in SPI, however, suggests that inflationary pressures continue to persist in certain sectors despite the broader downward trend in CPI inflation.
This positive development in the CPI inflation trend is reflective of the government’s ongoing efforts to stabilize prices and manage inflationary pressures through various economic policies. The reduction in inflation is expected to provide some respite to households and businesses alike, especially as the country navigates complex economic challenges. At the same time, the continued fluctuations in the SPI and the persistent price increases in certain sectors highlight the need for sustained policy interventions to ensure long-term price stability.
As Pakistan moves into 2025, the downward trend in CPI inflation is likely to be monitored closely by policymakers and economists, as it provides an important signal for the future trajectory of the country’s economy. The ongoing efforts to control inflation, combined with the resilience of key sectors, will be crucial for maintaining economic stability and supporting the purchasing power of consumers across the country.