Inflation rate in Pakistan is expected to fall below 1% in March 2025, the lowest level in 30 years.
March 2025 is predicted to see Pakistan’s inflation rate reach a record low with the Consumer Price Index (CPI) possibly dropping below 1% annually, the lowest monthly inflation figure in thirty years. This noteworthy improvement coincides with declining prices in several important consumer categories and indications of economic stabilization.
Topline Securities Forecasts March’s CPI at 0.5–1.0%
CPI inflation for March 2025 is predicted to be between 0.5% and 1.0% year over year, with a +0.9% increase month-over-month (MoM) per a recent research by Topline Securities. This would be in sharp contrast to the high inflation rate that were observed during the same time frame last year.
Consequently, it is anticipated that average inflation for the first nine months of FY25 will hover around 5.38% as opposed to the significantly higher 27.06% reported during July-March FY24.
Food Prices Are Rising, But There Is Still More Stability
Food inflation rate is expected to rise by 2.5% MoM in March 2025 despite the general decrease in inflation, primarily due to:
- Prices for tomatoes are up 43%.
- 25% more fruits
- A 10% increase in fresh vegetables
- Eggs and chicken are both up 15%
Pressure on Housing, Utilities, and Transportation Ease
The following factors are expected to support the modest 0.35% MoM decline in the housing, water, electricity and gas sectors:
- 6.27% decline in the electricity index
- Adjustments to fuel costs result in a 2.3% decrease in electricity costs.
Forecast for FY25 Inflation Dropped to 5–6%
Overall price stability particularly for non-perishable foods like wheat has caused Topline Securities to update its FY25 inflation estimate to 5% to 6%. This forecast suggests that the economy will continue to recover and may pave the way for future monetary policy adjustments.
Outlook for Policy Rates: Potential for Change but SBP May Hold
According to the report, the State Bank of Pakistan (SBP) may think about lowering the policy rate by 100 basis points in the future because real interest rates are predicted to be between 1100 and 1150 basis points in March which is significantly higher than Pakistan’s historical average of 200 to 300 basis points.
A number of factors are probably going to have an impact on this choice:
- IMF evaluation of the government budget for FY26
- Growing amounts of imports
