Pakistan’s inflation rate fell to 2.4% year-on-year in January 2025, marking its lowest level in 111 months, according to data released by the Pakistan Bureau of Statistics (PBS) on Monday. The figure represents a significant decline from 4.1% in December 2024 and continues the trend of easing price pressures in the economy.
On a month-on-month basis, the Consumer Price Index (CPI) recorded a 0.2% increase in January, slightly above the 0.1% rise in December but far lower than the 1.8% jump in January 2024.
Arif Habib Limited attributed the decline in annual inflation to a high base effect and lower food inflation.
For the first seven months of the fiscal year (7MFY25), average inflation stood at 6.5%, a sharp drop from 28.73% in 7MFY24.
Inflation had peaked at 38% in May 2023, but sustained policy interventions and administrative measures have contributed to its downward trajectory.
The Finance Division credited government policies for successfully curbing inflation and stabilizing prices of essential commodities.
The easing inflation has also influenced monetary policy, with the State Bank of Pakistan (SBP) cutting its key policy rate by 100 basis points (bps) to 12% last month. This marked the sixth consecutive rate cut since June 2024, when the policy rate stood at 22%.
Urban inflation stood at 2.7% year-on-year in January, down from 4.4% in December 2024 and 30.2% in January 2024. Meanwhile, rural inflation declined to 1.9%, compared to 3.6% in December and 25.7% a year ago.
On a monthly basis, both urban and rural inflation saw a 0.2% increase in January.
