The consumer price index (CPI) for June 2024 rose to 12.6% year-on-year (YoY), marking an increase from 11.8% YoY in May 2024 and a significant drop from 29.4% YoY in June 2023, according to the latest data released by the Pakistan Bureau of Statistics (PBS) on Monday.

On a month-on-month (MoM) basis, the CPI saw a 0.5% rise in June 2024, reversing a 3.2% decrease in the previous month and a 0.3% decrease in June 2023. This takes the average yearly inflation of FY24 to 23.4% YoY, compared to 29.2% YoY in FY23.

The average core inflation, measured by non-food non-energy items, rose by 14.1% YoY in June 2024, slightly down from 14.2% YoY in the previous month and 21.2% YoY in June 2023.

Every month, the average core CPI increased by 0.7% in June 2024, compared to an increase of 0.4% in the previous month and 0.8% in June 2023.

The latest inflation reading came in slightly higher than MG Research's expectations but aligned with the government's projections.

On Friday, the Ministry of Finance, in its monthly economic update and outlook report, had projected a slightly increased inflation outlook for June 2024 compared to the previous month, though it remains well below the levels of the same month last year.

“This rise is primarily due to higher prices of perishable items driven by Eid ul Adha,” the report stated. The government is implementing various administrative, policy, and relief measures to control inflationary pressures, it added.

The food index rose by 0.97% compared to a year ago, while the housing index surged by 35.29%, primarily due to the FCA adjustment in electricity costs. Transport costs fell by 1.63% compared to June last year amid deflated fuel prices.

Earlier this month, the State Bank of Pakistan (SBP) lowered its key policy rate by 150 basis points to 20.5%, citing a better-than-anticipated decline in May's inflation. This reduction was the first in almost four years. With the CPI-based inflation rate at 12.6% and the policy rate at 20.5%, the real interest rate now stands at 7.9%.