Weekly Inflation Hits Lowest Level in Decade, Expected to Drop Further in January

Islamabad:Pakistan’s inflationary pressures appear to be easing rapidly, as the Sensitive Price Indicator (SPI) for the week ending on January 23 recorded a modest annual increase of just 0.52%. This marks a significant decline compared to the previous week’s 1.16% rise and is the fourth consecutive week of inflationary decrease. This follows a high of 5.08% recorded at the end of December 2024.

The SPI, a measure of short-term inflation in essential goods, suggests that inflation is on a downward trajectory, prompting economists to predict a notable decline in the Consumer Price Index (CPI) for January. CPI, which stood at 4.1% in December, is expected to drop to under 3%, potentially reaching as low as 2.5% for January 2025.

This trend could prompt the State Bank of Pakistan (SBP) to reduce its policy rate, currently set at 13%. Analysts anticipate that the central bank’s Monetary Policy Committee, set to meet on January 27, may consider a potential 1.5% point cut in the policy rate.

This easing of inflation offers relief to consumers and could have positive implications for the broader economy.