Pakistan’s inflation rate in January 2025 was recorded at 2.4% on a year-on-year basis, a significant decrease from the 4.1% rate seen in December 2024, according to data from the Pakistan Bureau of Statistics (PBS). This marks the lowest inflation reading in 111 months, as reported by Topline Securities.

On a month-on-month basis, the Consumer Price Index (CPI) rose by 0.2% in January 2025, compared to a 0.1% increase in December 2024 and 1.8% in January 2024.

Experts attribute the drop in inflation to a high base effect and a reduction in food price inflation. For the first seven months of FY25, the average CPI inflation stood at 6.5%, a sharp decline from 28.73% during the same period in FY24.

Inflation had reached a record high of 38% in May 2023 but has been steadily decreasing since. Recent government actions, including policy interventions and administrative measures, have successfully controlled inflation, particularly by reducing the prices of essential items.

The State Bank of Pakistan (SBP) also reduced the key policy rate by 100 basis points to 12% in January 2025, marking the sixth consecutive rate cut since June 2024. SBP Governor Jameel Ahmad has indicated that inflation is expected to ease further before rising slightly in the months ahead.

The latest CPI reading was even lower than expected, with projections from brokerage firms such as JS Global and Ismail Iqbal Securities estimating inflation below 3%.

Urban inflation dropped to 2.7% in January 2025, down from 4.4% the previous month and 30.2% in January 2024. Rural inflation also saw a decline, reaching 1.9% compared to 3.6% in December 2024 and 25.7% in January 2024. Both urban and rural inflation saw a slight uptick on a month-on-month basis in January 2025, with increases of 0.2% in both sectors.