Pakistan’s headline inflation rate fell to 9.6% year-on-year in August 2024, marking a significant decrease from July’s 11.1% and returning to single-digit territory for the first time in three years, according to data from the Pakistan Bureau of Statistics (PBS).

The last time inflation was this low was in October 2021, when it stood at 9.2%.

On a month-on-month basis, the Consumer Price Index (CPI) rose by 0.4% in August 2024, a slower increase compared to the 2.1% rise in July and the 1.7% increase in August 2023.

This reading aligns with the Ministry of Finance’s expectations, which had projected inflation to range between 9.5% and 10.5% for August in its monthly economic outlook.

The Ministry of Finance attributed the decline to stability in economic indicators and anticipates further decreases, predicting inflation to fall to between 9% and 10% in September 2024.

This comes after the State Bank of Pakistan (SBP) reduced the key policy rate by 100 basis points to 19.5% in July, citing potential risks to the inflation outlook from fiscal slippages and energy price adjustments.

Inflation has been a persistent challenge for Pakistan’s economy, peaking at a record high of 38% in May of the previous year. However, it has been on a downward trend since then. The latest figures also matched projections from several brokerage houses.

The PBS data also highlighted differences between urban and rural inflation rates. Urban inflation was recorded at 11.7% year-on-year in August 2024, down from 13.2% in July and 25.0% in August 2023. On a month-on-month basis, urban inflation increased by 0.3% in August 2024.

Meanwhile, rural inflation stood at 6.7% year-on-year, down from 8.1% in July and 30.9% in August 2023, with a month-on-month increase of 0.6% in August 2024.