Pakistan’s inflation pressures showed signs of relief in November 2024, with the Consumer Price Index (CPI) based inflation slowing down to 4.9 percent on a year-on-year (YoY) basis. This marks a significant improvement from the 7.2 percent recorded in the previous month and a steep decrease from the staggering 29.2 percent in November 2023. According to the Pakistan Bureau of Statistics (PBS), this slowdown in inflation is the lowest observed in 78 months, indicating a positive shift in the country’s economic outlook.

Urban vs Rural Inflation

Inflation in urban areas has notably decreased, with CPI inflation falling to 5.2 percent YoY in November 2024 from 9.3 percent in October. This marks a significant easing compared to the 30.4 percent inflation rate seen in November 2023. However, while urban inflation shows signs of easing, rural areas experienced a slight uptick in prices, with CPI inflation in rural regions increasing by 4.3 percent YoY in November 2024. This is a modest rise from the 4.2 percent in the previous month and remains substantially lower than the 27.5 percent recorded last year.

On a month-on-month (MoM) basis, both urban and rural inflation showed moderate increases. Urban inflation rose by 0.5 percent, down from 1.1 percent in October, while rural inflation increased by 0.5 percent as well, which is a slower pace compared to the 1.5 percent rise observed in the previous month.

SPI, WPI, and Core Inflation Trends

The Sensitive Price Index (SPI), which tracks the prices of essential goods, also showed a favorable trend, with inflation slowing to 7.3 percent YoY in November 2024, compared to 9.7 percent in October and 30.6 percent in November 2023. On a MoM basis, SPI inflation rose by 1.0 percent, a modest increase compared to the 0.6 percent increase recorded in October.

The Wholesale Price Index (WPI), which reflects the price changes of goods at the wholesale level, saw a more substantial decrease in inflation. WPI inflation fell to 2.3 percent YoY in November 2024, down from 3.9 percent in October and a drastic drop from 26.4 percent in November 2023. This decline in WPI inflation could suggest that the price pressures at the production and wholesale stages are subsiding, potentially signaling a broader economic stabilization.

Core Inflation Insights

Core inflation, which excludes food and energy prices to provide a clearer picture of underlying inflationary trends, showed a mixed pattern across urban and rural areas. In urban regions, core inflation, measured by non-food and non-energy (NFNE) inflation, increased slightly to 8.9 percent YoY in November 2024, up from 8.6 percent in the previous month but still lower than the 18.6 percent recorded in November 2023. On a MoM basis, core inflation increased by 1.2 percent, indicating that underlying price pressures are still present, but not at alarming levels.

Rural core inflation, on the other hand, decreased to 10.9 percent YoY in November 2024, down from 11.7 percent in October and a significant reduction from the 25.9 percent in November 2023. This slowdown is a hopeful sign of economic stabilization in the rural economy as well.

Trimmed Core Inflation

Another measure of core inflation, known as the Trimmed Mean Inflation (based on a 20 percent weighted average), reflects a similar trend. Urban areas saw a rise in trimmed inflation to 7.5 percent YoY in November 2024, compared to 6.4 percent in October, but it was still much lower than the 22.9 percent observed in November 2023. Rural trimmed core inflation increased to 7.8 percent YoY, from 7.2 percent in the previous month and 27.9 percent a year ago.

The Road Ahead

The inflationary slowdown in November 2024 is a welcome development for Pakistan’s economy. The reduction in CPI, SPI, and WPI inflation suggests that the country may be on a path toward greater economic stability. However, the uptick in core inflation in urban areas and the slight increase in rural inflation highlight that the economy is still grappling with price pressures, especially on essential goods. The government and the central bank will need to continue monitoring these trends closely and implement policies that can maintain price stability without stifling economic growth.

The inflation data for November 2024 offers a mixed but hopeful picture, showing that Pakistan’s economy may have turned a corner. The coming months will be critical in determining whether this positive trend continues, or if inflationary pressures will once again rise to higher levels.

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