Pakistan’s headline inflation stood at 0.7% year-on-year (YoY) in March 2025, a significant decrease compared to 1.5% in February 2025, according to data released by the Pakistan Bureau of Statistics (PBS) on Thursday.
On a month-on-month (MoM) basis, inflation rose by 0.9% in March 2025, a shift from the previous month’s 0.8% decline. In comparison, inflation in March 2024 had surged by 1.7%. This marks the lowest inflation rate in Pakistan since December 1965, making it a 59-year low, as noted by Arif Habib Limited (AHL).
During the first nine months of the fiscal year (9MFY25), the average Consumer Price Index (CPI) inflation stood at 5.25%, a stark contrast to the high 27.06% recorded in the same period the previous year (9MFY24).
The inflation rate in Pakistan had been a major economic challenge, with the CPI hitting a historic high of 38% in May 2023. However, the rate has been on a steady decline since then. According to recent reports from the Finance Division, the March 2025 inflation was expected to remain in the range of 1-1.5%, with a slight uptick projected to 2-3% in April 2025.
In its latest meeting, the Monetary Policy Committee (MPC) decided to maintain the policy rate at 12%, acknowledging the drop in food and energy prices as the key driver for the lower-than-expected February inflation. However, the committee expressed concern over the inherent volatility in these prices, suggesting that any future increases could lead to a rise in inflation.
The March CPI figures aligned closely with projections from several brokerage houses, including Topline Securities, which anticipated a YoY inflation rate between 0.5-1%, the lowest in over 30 years.
When broken down by region, urban inflation decreased to 1.2% YoY in March 2025, compared to 1.8% in February 2025, and 21.9% in March 2024. On a MoM basis, urban inflation increased by 0.8%. Rural inflation, however, remained stable YoY at 1.1% and rose by 1.1% on a MoM basis.
