Pakistan's Inflation Sees Significant Decline, Offers Economic Relief

In May, Pakistan experienced a notable decrease in consumer prices, marking a 3.2% month-on-month decline, the largest in over two years. This reduction comes just before the central bank's upcoming key rate review, which has remained at a high of 22% for seven consecutive policy meetings.

The most recent economic report from the Federal Bureau of Statistics projects that Pakistan's inflation will fall between 13.5% and 14.5% in May, with expectations to further ease to 12.5% to 13.5% by June 2024. The Ministry of Finance's 'Monthly Economic Update and Outlook' report indicates that CPI-based inflation is likely to stabilize within this range in May and continue to decrease in the coming months.

Since May 2022, Pakistan has been struggling with inflation rates exceeding 20%. Last May, inflation soared to 38% due to reforms introduced under an International Monetary Fund bailout program. However, in the first eleven months of the current fiscal year (July to May), the inflation rate has dropped to 24.5% from 29.1% in the same period last year.

According to the Bureau of Statistics, over the past year, electricity prices have risen by 58.7%, transport services by 32.2%, cotton clothing by 23.2%, onions by 86.6%, tomatoes by 55.4%, and spices by 39.17%.

The recent decline in consumer prices in Pakistan offers a glimmer of hope amidst the country's persistent battle with high inflation rates. With projections indicating a gradual easing of inflation in the coming months, there is optimism for improved economic stability. It is essential for policymakers to continue monitoring and implementing measures to sustain this positive trend and alleviate the financial burden on the population.