Inflation slows to lowest in three years

ISLAMABAD (Reuters): Pakistan’s annual consumer price inflation slowed to 6.9% in September, data showed on Tuesday, the lowest in more than three years, as the government seeks to implement IMF conditions that many households fear will hit them hard financially.

Annual inflation had slowed the previous month to 9.6%, the first single digit reading in more than three years.

Tuesday’s data from the Pakistan Bureau of Statistics (PBS) also showed that the monthly consumer price index in September stood at -0.5%.

“Due to aggressive monetary tightening, the State Bank of Pakistan (SBP) has achieved in bringing inflation below 7% one year ahead of target,” said Mohammad Sohail, chief executive officer at brokerage Topline Securities.

Pakistan’s central bank has cut interest rates three times this year, saying it is confident that inflation is in check after it previously lifted rates to an all-time high of 22%.

In an economic outlook published last week the finance ministry said it expected annual inflation to decrease to 8-9% in September and October.

The International Monetary Fund approved a $7 billion loan programme for Pakistan last month that includes tough measures such as higher taxes on farm incomes and electricity prices.

The prospect of such moves has spurred concerns among poor and middle-class Pakistanis about higher prices after years of soaring inflation despite the recent downward trends.