Pakistan’s Consumer Price Index (CPI) for November 2024 is projected to clock in at 4.5-5% year-on-year, with a 0.4% increase on a monthly basis, according to data compiled by brokerage firm Topline Pakistan Research.
This places the average inflation for the first five months of FY25 at 7.91%, a sharp decline from the 28.62% recorded during the same period last year.
Food inflation is expected to rise by 0.2% due to notable increases in the prices of eggs, moong pulses, tomatoes, and potatoes, with hikes ranging from 5-35%.
Meanwhile, the housing, water, electricity, and gas category is set to grow by 0.11%, driven by a 7% increase in LPG prices. Electricity costs, however, are anticipated to decline due to a negative fuel cost adjustment.
The transport segment is forecasted to increase by 1.4%, reflecting higher petrol and diesel prices.
Real interest rates are projected to climb to 1,000-1,050 basis points, significantly exceeding Pakistan’s historical average of 200-300 basis points.
The policy interest rate is expected to stabilize at 11-12% by December 2025, maintaining positive real rates of 200-300 basis points based on the FY26 inflation average forecast of 8.8%. For FY25, inflation is projected to range between 7-8%.
The International Monetary Fund (IMF) has revised its FY25 inflation forecast to 9.5%, down from an earlier estimate of 12.7%. The State Bank of Pakistan (SBP) has also indicated that FY25 inflation is likely to fall below its previous forecast of 11.5-13.5%.
According to the brokerage report, key risks to these projections include fluctuations in global commodity prices, particularly crude oil, currently assumed at $75 per barrel. Significant deviations in these prices could impact the inflation outlook for the remainder of the fiscal year.
