Pakistan's inflation rate is poised to fall significantly in May, with projections indicating a drop below 14% for the first time in several months.
According to a Consumer Price Index (CPI) preview, the nation's headline inflation is expected to decelerate to approximately 13.9% year-on-year (YoY) in May 2024.
This notable reduction is attributed to a considerable decline in monthly prices, supported by a favorable base effect.
Monthly inflation is projected to fall by 1.4%, marking the second consecutive monthly decline and significantly lower than the 12-month average increase of 1.35% month-on-month (MoM).
The primary drivers behind this decrease include a 440 basis points (bps) drop in the Food index, resulting from deflated prices of essential commodities such as onions, tomatoes, chicken, and wheat. Additionally, the Transport index is anticipated to decrease due to lower fuel prices.
The CPI preview also suggests that if consumer prices continue to rise at an average rate of 0.5% per month, annual inflation could drop to around 7.4% by the end of December 2024. Even with a 1% monthly increase, annual inflation is expected to fall to approximately 11.7% by year-end.
Weekly inflation drops by 0.34
On the other hand, the weekly inflation rate has dropped by 0.34% compared to the previous week, according to the latest data released by the Pakistan Bureau of Statistics (PBS).
The Weekly Sensitive Price Indicator (SPI) for the Combined Group decreased to 308.19, down from 309.25 a week earlier.
The decrease in weekly inflation is attributed to a decline in prices of essential items such as garlic, chicken, wheat flour, LPG, and onions.
Garlic prices plummeted by 7.87%, while chicken prices dropped by 5.92%. Wheat flour prices decreased by 4.66%, LPG prices by 3.23%, and onion prices by 1.99%.
However, some items saw a significant price increase, including beef (0.49%), energy savers (0.44%), pulse gram (0.42%), milk powder (0.37%), and tea prepared (0.30%).
The weekly SPI percentage change by income groups showed that all income groups experienced a decrease in inflation, ranging from -0.33% to -0.39%. The lowest income group saw a weekly fall of 0.38%, while the highest income group experienced a fall of 0.33%.
On a yearly basis, the SPI increased across all income segments, ranging between 14.49% and 24.62%. The lowest income group saw a yearly increase of 14.49%, while the highest income group recorded an increase of 19.2%.
The average price of Sona urea stood at Rs4,803 per 50 kg bag, which is 0.73% lower than last week's price but 55.31% higher than last year. Meanwhile, the average cement price was recorded at Rs1,233 per 50 kg bag, which is 1.91% higher than the previous week and 10.07% higher than prices last year.
