The monthly inflation rate witnessed a significant drop and reached 29.40 percent in June compared to an increase of 38pc in May, according to data released by the Pakistan Bureau of Statistics (PBS) on Monday.
PBS data stated that the decline in inflation was primarily attributed to the stabilisation of the US dollar and a decrease in commodity prices.
The food group, which holds a substantial weight of 34.58 percent in the inflation reading, played a significant role in driving down inflation. It decreased from 264.45 in May 2023 to 261.78 in June 2023, reflecting a decrease of over 1 percent.
Fahad Rauf, Head of Research at Ismail Iqbal Securities, stated, “We projected CPI inflation to be around 29.9 percent, but the decline was expected.”
He further explained that last year in June, several adjustments were made to satisfy the International Monetary Fund (IMF), resulting in a high base effect this month.
Additionally, the stabilization of the US dollar and the decline in oil prices contributed to the decrease in inflation.
Rauf added that inflationary pressure is not currently building up and expects further declines in inflation after the IMF program, as the US dollar is anticipated to stabilize and international commodity prices have softened.
In terms of rural and urban inflation, CPI inflation in urban areas recorded a year-on-year basis of 27.3 percent in June 2023, compared to an increase of 35.1 percent in the previous month and 19.8 percent in June 2022. On a month-on-month basis, urban inflation increased by 0.1 percent in June 2023, compared to a 1.5 percent increase in the previous month and a 6.2 percent increase in June 2022.
On the other hand, CPI inflation in rural areas increased to 32.4 percent on a year-on-year basis in June 2023, compared to an increase of 42.2 percent in the previous month and 23.6 percent in June 2022.
However, on a month-on-month basis, rural inflation decreased to 0.8 percent in June 2023, compared to a 1.7 percent increase in the previous month and a 6.6 percent increase in June 2022.
