The Consumer Price Index (CPI) for May 2024 registered an 11.8% year-on-year increase, a significant reduction from 17.3% in April 2024 and 38.0% in May 2023, according to the latest data released by the Pakistan Bureau of Statistics (PBS) on Monday.

On a month-on-month basis, the CPI fell by 3.2% in May 2024, following a 0.4% decrease in April 2024 and a 1.6% increase in May 2023.

These inflation figures came in lower than the expectations of MG Research and the Finance Ministry’s forecast. Consequently, the average yearly inflation for the first eleven months of FY24 stands at 24.9% year-on-year, compared to 29.0% in the same period last year.

The marked slowdown in inflation was primarily driven by a substantial reduction in food prices. The food index saw a 7.8% decline from the previous month, largely due to a 20.1% drop in prices of perishable food items.

A report from the Finance Ministry indicated that the government is actively working to improve the availability of perishable and staple food items, such as wheat, to support marginalized communities.

Core inflation, which excludes food and energy prices, rose by 14.2% year-on-year in May 2024. This was a moderation from the 15.6% increase recorded in April 2024 and significantly lower than the 22.7% rise in May 2023. On a monthly basis, core CPI increased by 0.4% in May 2024, down from a 2.1% rise in the previous month and a 1.7% increase in May 2023.

The following table provides a detailed breakdown of inflation metrics:

CPI MoM-3.2%-0.4%1.6%1.1%2.4%
CPI YoY11.8%17.3%38.0%24.9%29.0%
Core CPI MoM0.4%2.1%1.7%1.1%1.7%
Core CPI YoY14.2%15.6%22.7%19.3%17.5%

With the CPI-based inflation rate at 11.8% and the policy rate at 22.0%, the real interest rate now stands at 10.2%.


Looking ahead, if consumer prices increase by an average of 0.5% per month, annual inflation is projected to drop to approximately 3.4% by December 2024. Should the monthly increase align with the last 12-month average of 0.95%, annual inflation is expected to fall to about 6.6% by year-end.



Experienced Senior Research Analyst



Sikander Raza, a Senior Technical Analyst



Hamza Saleem, a Senior Business Analyst



Irsa Sajjad, as a Research Analyst for Equities

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