In February, the inflation rate measured by the Consumer Price Index (CPI) decreased to 23.06% year-on-year from 28.34% in the previous month, mainly due to a slight drop in food prices. This is the lowest reading in 20 months, down from a peak of 37.97% in May 2023. Until December 2023, inflation had been around 29% for three consecutive months, driven by rising prices of essential kitchen items, gas, and electricity rates. However, from January 2024, the inflation rate started to decline.
In February, the food index decreased by 1.62% month-on-month, primarily due to lower prices of perishable and non-perishable products. This contributed to the overall decrease in inflation, while other groups continued to rise. The average inflation for the first eight months of FY24 was 27.96%, exceeding the government’s projection of 21%. The IMF has forecasted average inflation for FY24 at 25.9%, lower than the previous year.
Urban inflation in February was 24.9% year-on-year and 0.2% month-on-month, while rural inflation was 20.5% YoY and decreased by 0.3% MoM. The CPI basket is divided into 12 major components, with “food and non-alcoholic beverages” and “housing, water, electricity, gas, and fuels” seeing significant annual increases in February.
Food inflation in urban areas was 20.02% and 19% in rural areas in February, while non-food inflation was 28.2% in urban areas and 22.1% in rural areas. Core inflation, excluding volatile food and energy prices, slightly decreased in urban and rural areas. In urban areas, the highest price increases were seen in fresh fruits, honey, fish, and other food items, while a decrease was observed in prices of eggs, tomatoes, onions, and cooking oil.
In the non-food category, increases were seen in gas charges, motor fuel, and household services, while decreases were observed in Liquefied Hydrocarbons and Stationery.