According to the Pakistan Bureau of Statistics (PBS), consumer inflation accelerated to 4.1% year-on-year in July, up from 3.2% in June. This increase was primarily driven by rising prices for food items, fuels, and medicines. On a month-on-month basis, the consumer price inflation was 2.9%.
Central Bank’s Stance: The higher inflation reading follows the State Bank of Pakistan’s assessment of a deteriorating inflation outlook, which led it to keep the key interest rate unchanged at 11%. The bank’s monetary policy committee stated that energy prices, particularly for gas, had risen more than expected, and it considered that the real policy rate should be adequately positive to keep inflation within the 5%–7% target range.
Price Volatility: The Sensitive Price Indicator (SPI) inflation decreased by 0.9% year-on-year in July, compared to a 1.9% decrease a month earlier. On a week-on-week basis, prices of 11 out of 51 items increased, 12 decreased, and 28 remained stable.
Items with Major Price Increases: The items that recorded a major week-on-week increase in their average prices included tomatoes (17.26%), chicken (4.76%), bananas (2.97%), pulse moong (1.55%), and LPG (1.39%).
Items with Major Price Decreases: Conversely, commodities that saw a significant week-on-week decrease in their average prices included eggs (1.80%), firewood (1.11%), cooked beef (1.08%), and powdered milk (0.49%).
