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(Bloomberg) — Pakistan’s inflation eased further in August to the lowest in almost three years, giving the central bank room to reduce interest rates further. 

Consumer prices rose 9.64% in August from a year ago, according to data released by Pakistan Bureau of Statistics on Monday. That compares with a median estimate for a 9.8% gain in a Bloomberg survey and a 11.09% increase seen in July. 

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Slowing price gains will allow policymakers space to lower borrowing costs further and shore up growth. Pakistan’s central bank has slashed rates by a cumulative 250 basis points in the last two meetings and is scheduled to hold the next review on Sept. 12. 

Easing inflation will also provide some relief to Prime Minister Shehbaz Sharif’s government that has been facing criticism for high cost of living. Authorities are undertaking reforms to win the International Monetary Fund’s final approval for a new loan of $7 billion to manage mounting debts.

Food costs rose 2.46% from a year ago, compared with 1.56% in July, while transport prices rose 3.17% after climbing 12.2% the previous month. Housing and energy costs rose 22.2% compared with 25.3% a month ago.

Pakistan will see single-digit inflation in the coming months, the finance ministry said last month. The central bank forecasts average inflation to remain in the range of 11.5%–13.5% in the fiscal year through June 2025. 

A spike in oil and commodity prices due to the tensions in the Middle East and a delay in the IMF program will be key risks to price gains going forward, said Mohammed Sohail, chief executive officer of Topline Securities Ltd.

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