Pakistan’s annual inflation slowed to 4.1% in December

Pakistan’s consumer inflation rate slowed to 4.1 per cent year on year in December, the statistics bureau said, the lowest in more than 6-1/2 years.

The South Asian country is navigating a challenging economic recovery path buttressed by a $7 billion facility from the International Monetary Fund (IMF) granted in September.

Consumer prices in December rose 0.1 per cent from the month before, according to the Pakistan Bureau of Statistics.

In its monthly report released last week, the finance ministry said that the annual inflation rate was expected to hold in the range of 4-5 per cent in the final month of the year.

Annual inflation had already slowed to 4.9 per cent in November, largely due to a high base a year earlier, coming in below the government’s forecast and significantly lower than a multi-decade high of around 40 per cent in May 2023.

“Inflation has come down on the back of stable currency, lower global commodity prices and improved supply chain,” said Samiullah Tariq, head of research and development at Pak Kuwait Investment Company.

Pakistan’s central bank previously targeted 5-7 per cent inflation in the medium term but its head has said the level is now in sight within the next 12 months.

The State Bank of Pakistan (SBP) cut its key policy rate by 200 basis points to 13 per cent in December, the fifth straight reduction since June, to bring cumulative rate cuts for 2024 to 900 basis points and making it one of the most aggressive emerging market central banks in the current easing cycle.