According to a research released on Friday by Topline Securities, Pakistan’s decreasing inflationary trend is likely to continue in October but is anticipated to slightly increase on a monthly basis.
The brokerage firm predicted that Pakistan’s Consumer Price Index (CPI) for October 2024 would be 6.5-7.0% YoY (+0.9% MoM), bringing the 4MF25 average down to 8.6% from 28.5% in 4MFY24.
A major and ongoing economic problem in Pakistan, especially in recent years, has been inflation. The CPI inflation rate reached a record high of 38% in May of last year. Since that time, though, it has been declining.
As per the figures released by the Pakistan Bureau of Statistics (PBS) on Tuesday, headline inflation in Pakistan was 6.9% year over year in September 2024, which was less than the 9.6% estimate in August 2024. According to the PBS, the CPI figure was the lowest since January 2021.
The trading firm stated on Friday that “real rates will rise to 1050-1100bps, substantially greater than Pakistan’s historic average of 200-300bps,” as a result of inflation projections of about 6.5–7.0% for October 2024.
A further reduction in the main policy rate is also encouraged by the growing real rates.
Amid dropping inflation and falling global oil prices, the State Bank of Pakistan’s (SBP) MPC announced its most dramatic decrease to the main policy rate since April 2020 at its most recent meeting, lowering it by 200 basis points to 17.5%.
On November 4, 2024, the central bank will hold its monetary policy meeting. According to Topline Securities, “we expect the fourth successive cut in interest rates to the amount of 200bps from current level of 17.5%, taking overall cut to 650bps in last 4-5 months.”
