Pakistan's Inflation Plummets to Historic Lows: A Turning Point?

Pakistan's consumer inflation rate dropped to 2.4% in January, the lowest in over nine years, aided by currency stability and lower food and energy prices. The State Bank of Pakistan has responded with aggressive interest rate cuts, fostering economic recovery amid an IMF facility.

Pakistan's consumer inflation rate has plummeted to its lowest in over nine years, marking a significant drop to 2.4% in January, according to the latest statistics released by the bureau on Monday. The decline from 28.3% last January highlights a noteworthy shift in the country's economic landscape.

The Pakistan Bureau of Statistics reported a slight increase in consumer prices by 0.2% from the previous month. This marks a positive trend as the nation is on the path to recovery with the help of a $7 billion facility granted by the International Monetary Fund last September. The IMF is set to assess Pakistan's economic progress by March, and the government remains optimistic about hitting its established targets.

Adnan Sami Sheikh of Pakistan Kuwait Investment Company attributes this inflationary easing to a statistical base effect, stable currency, and reduced food and energy prices. The central bank has adjusted its benchmark interest rate down by 100 basis points to 12%, reflecting a strategic move to sustain growth after substantial rate cuts. These efforts, combined with favorable base effects, have pushed inflation down to 4.1% in December, suggesting a promising economic trajectory.

(With inputs from agencies.)