Pakistan’s inflation rate is expected to remain stable in February 2025, ranging between 2.0% and 2.5%, nearly unchanged from the 2.4% recorded in January, according to a report released by Topline Securities on Friday.

Inflation has been a persistent issue for Pakistan, especially in recent years. After reaching a record high of 38% in May 2023, inflation has been steadily declining. The Consumer Price Index (CPI) for January 2025 recorded the lowest inflation rate in 111 months, driven by a high base effect and reduced food prices.

Topline Securities expects the CPI for February 2025 to settle between 2.0% and 2.5% year-on-year, pushing the average for the first eight months of fiscal year 2025 (8MFY25) to 6.07%, a sharp drop from 27.96% in 8MFY24.

The report highlights that food inflation is expected to decrease by 0.4% month-on-month (MoM) in February, largely due to a significant drop in tomato prices (down 55%), onions (down 27%), and potatoes (down 21%). However, fresh fruits and sugar prices are anticipated to rise by 9-15%.

The housing, water, electricity, and gas sector is predicted to see a 0.2% MoM decline, driven by an 8% drop in LPG prices and a 0.5% decrease in electricity costs due to higher fuel cost adjustments (FCA). On the other hand, the transport sector is expected to experience a 1.2% MoM increase, primarily due to a 2-4% rise in petrol and diesel prices.

While the inflation outlook for February appears stable, the report notes that any significant changes in commodity prices could alter these estimates.

For the full financial year 2025, Topline Securities has maintained its inflation forecast at 6.0-7.0%.

In line with expectations, the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) reduced the key policy rate by 100 basis points last month, bringing it down to 12%. The MPC noted that inflation continued to decrease in December, reaching 4.1% year-on-year, supported by moderate domestic demand and favorable supply-side dynamics, along with the base effect.