Pakistan inflation October 2024 rate decreased to 7.2% from previous months’ double-digit levels, signaling economic stabilization. Food and gas price rises contributed significantly, while the State Bank of Pakistan kept interest rates at 17.5%, with further cuts expected. Revenue targets remain a challenge due to low inflation and economic activity.
Overview Pakistan inflation October 2024 Trends
Pakistan’s inflation rate recorded a notable decline, reaching 7.2% in October 2024. Compared to the inflation volatility of recent years, this stabilization reflects the impact of multiple economic measures taken by the government, including tighter fiscal policies and currency stabilization efforts. Month-on-month, inflation rose by 1.5%, following a slight decrease in September, highlighting persistent underlying pressures despite the overall downtrend.
Contributing Factors to Inflation
Food Prices
Essential food items, especially perishables like onions, vegetables, and fruits, saw increased prices. Food inflation for urban areas was recorded at 2.7%, while rural areas experienced only a 0.6% increase. However, this inflation rate still placed a burden on low-income families in rural and urban regions
Gas and Utility Costs
Utility costs, particularly gas prices, surged by an astounding 319% year-on-year, largely due to global energy price pressures and domestic fiscal challenges. Vehicle-related taxes rose as well, compounding household costs for many residents
Interest Rate and Monetary Policy
The State Bank of Pakistan, which recently cut the interest rate to 17.5%, is expected to implement further reductions to stimulate economic growth as inflation appears to be easing. Analysts predict additional cuts, with some expecting a reduction of up to 2% if inflation remains contained. This trend aligns with government goals to maintain inflation below 12% for the fiscal year.
Impact on Revenue Collection
The Federal Board of Revenue (FBR) highlighted a revenue shortfall linked to the declining inflation rate, which typically hampers tax revenue from high-value sectors. As inflation cools and industrial growth remains slow, the FBR faces challenges in meeting its fiscal targets, calling for stronger enforcement measures Business Recorder,
Future Outlook
The government has set an inflation target of 12% for the fiscal year, while the IMF projects a lower end-of-year rate of 9.5%. The SBP’s monetary adjustments and government’s fiscal policies will play a critical role in meeting these targets while ensuring minimal economic disruption.
Conclusion
October’s inflation rate signals a gradual recovery and potential for economic stability in Pakistan, although the FBR and SBP must navigate ongoing fiscal pressures. As inflation moderates, further interest rate adjustments may provide relief for the economy.