Inflation clocks in at 2.4% in January

KARACHI: Pakistan’s Consumer Price Index (CPI) inflation dropped sharply to 2.4% year-on-year in January 2025, down from 4.1% in December, according to fresh data released on Monday.

This marks a significant decline from the staggering 28.3% recorded in January 2024, reflecting easing price pressures across both urban and rural areas. Inflation had peaked at 37.97% in May 2023, but has been on a downward trajectory since then.

On a month-on-month basis, CPI inflation edged up slightly by 0.2% in January, compared to 0.1% in December and 1.8% in January 2024.

Lowest Inflation in Over Nine Years

According to Topline Securities, inflation during 7MFY25 has averaged at 6.5%, significantly lower than 28.73% in 7MFY24. The brokerage firm noted that this is the “lowest reading in 111 months (over nine years).”

Rural and Core Inflation Trends

• Rural inflation fell to 1.9% year-on-year in January, down from 3.6% in December and 25.7% in January 2024. On a monthly basis, it rose by 0.2%, slightly lower than the 0.3% increase in December.
• Core inflation, which excludes food and energy prices, also declined.
  • In urban areas, core inflation dropped to 7.8% year-on-year, compared to 8.1% in December and 17.8% in January 2024. Month-on-month, it rose by 0.8%.
  • In rural areas, core inflation stood at 10.4% year-on-year, down from 10.7% in December and 24.6% in January 2024. Monthly, it increased by 0.9%.

SPI and WPI Inflation

• The Sensitive Price Index (SPI), which tracks essential commodities, dropped to 0.7% year-on-year in January, compared to 4.2% in December and 36.2% in January 2024.
  • On a monthly basis, SPI inflation declined by 1.4%, reversing a 0.8% increase in December.
• The Wholesale Price Index (WPI) inflation slowed to 0.6% year-on-year, down from 1.9% in December and 27.0% in January 2024.
  • On a monthly basis, WPI inflation rose by 0.2%, after a 0.4% decline in December.

Trimmed Mean Core Inflation

The 20% weighted trimmed mean core inflation, a measure that removes extreme price changes, fell to 5.4% year-on-year in both urban and rural areas. This is down from 6.2% (urban) and 6.5% (rural) in December, and significantly lower than 22.1% and 25.8% in January 2024.

On a month-on-month basis:

• Urban trimmed mean inflation rose by 0.6% (vs. 0.1% in December).
• Rural trimmed mean inflation increased by 0.7% (vs. 0.6% in December).

The latest figures indicate a major easing of inflationary pressures, providing relief to consumers after months of economic strain.