Pakistan’s annual consumer inflation rate fell to 4.1% in December 2024, marking the lowest level in over 6.5 years (81 months) since April 2018, according to data released by the Pakistan Bureau of Statistics (PBS) on Wednesday. The significant decline reflects a sharp improvement in price stability compared to the previous year.

The headline inflation, measured by the Consumer Price Index (CPI), had slowed to 4.9% in November 2024 and stood at a staggering 29.7% in December 2023. This brought the average inflation for the first half of FY25 (1HFY25) to 7.2%, a significant drop from the 28.8% average recorded during the same period in FY24, according to Arif Habib Limited (AHL).

On a month-on-month basis, inflation increased marginally by 0.1% in December 2024, compared to a 0.5% rise in November 2024 and a 0.8% increase in December 2023. The slower monthly increase indicates a continued easing of inflationary pressures.

Urban and Rural Inflation Breakdown
Urban inflation dropped to 4.4% year-on-year in December 2024, down from 5.2% in November 2024 and 30.9% in December 2023. On a month-on-month basis, urban inflation decreased by 0.1% in December 2024, compared to a 0.5% increase in the previous month and a 0.7% rise in December 2023.

Rural inflation also saw a significant decline, falling to 3.6% year-on-year in December 2024, compared to 4.3% in November 2024 and 27.9% in December 2023. However, on a month-on-month basis, rural inflation rose slightly by 0.3% in December 2024, compared to a 0.5% increase in November 2024 and a 1.0% rise in December 2023.

The sharp decline in inflation reflects improved economic conditions and price stability, offering relief to consumers after a period of high inflationary pressures. Analysts attribute the drop to better fiscal management, reduced global commodity prices, and a stronger rupee. However, they caution that maintaining this trend will require continued economic discipline and favorable external conditions.