The Pakistan Bureau of Statistics (PBS) reported that headline inflation in Pakistan was 1.5% in February 2025, which was less than the 2.4% rate in January. February 2024 saw no change in the Consumer Price Index (CPI), which decreased by 0.8% month over month after increasing by 0.2% in January.
From 27.96% in 8MFY24 to 5.85% in 8MFY25, the average CPI inflation rate decreased. This February result was the poorest since September 2015, according to analysts at Arif Habib Limited (AHL). Pakistan has struggled with inflation for a long time; it peaked in May 2023 at 38% but has since decreased.
The Finance Division forecast a few days ago that headline inflation would maintain a range of 2% to 3% in February and rise to 3-4% in March. In January, the State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) reduced the benchmark interest rate by 100 basis points to 12%. Since June 2024, when the rate was 22%, there have been six rate reductions. In the months that followed, inflation would rise, according to Governor SBP Jameel Ahmad, after declining in January. The next MPC meeting is scheduled for March 10.
Inflation for February was significantly lower than most brokerages had predicted. It was predicted by JS Global to decline to 2.3%. Additionally, Topline Securities forecasted a reading between 2.0 and 2.5%, meaning that the 8MFY25 average would be 6.07% as opposed to 27.96% in 8MFY24.
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In February 2025, the urban CPI fell to 1.8% year-over-year, from 2.7% in January and 24.9% in February 2024. On a monthly basis, it also dropped by 0.7%. From 20.5% in February 2024 to 1.9% a month earlier, rural inflation dropped to 1.1%. It dropped 1.1% month over month in 2024, after rising 0.2% in January and falling 0.3% in February.
With inflation rates down, the prices of essential goods and services are expected to stabilize or decrease, making everyday items more affordable for households.
As prices stabilize, people’s purchasing power improves, allowing them to buy more with the same amount of money. This can lead to better living standards and more disposable income for other needs.
Lower inflation can contribute to overall economic stability, encouraging investment and growth. This can result in more job opportunities and better wages.
Overall, the decrease in inflation is a positive development for Pakistan, potentially leading to a more stable and prosperous economic environment.