Pakistan’s inflation projected at 1-1.5% in March 2025, with a rise expected in April

Pakistan’s headline inflation is anticipated to remain within the range of 1.0-1.5% for March 2025 and inching up to 2.0-3.0% in April 2025, according to the Finance Division’s latest projections. 

The ministry’s ‘Monthly Economic Update and Outlook’ notes that inflation could rise to 2-3% in April 2025, a shift from the current downward trajectory. 

However, brokerage firm AKD Securities projected inflation to drop to 0.84% year-on-year in March 2025, marking the lowest rate in the last six decades, largely due to deflation in food, housing, and transport costs. On a month-on-month basis, inflation is expected to increase by 1.0%, primarily driven by a 2.8% rise in food prices.

According to the AKD Research report, the disinflationary trend comes as a result of declining petroleum prices, lower electricity tariffs, controlled food prices, and fiscal consolidation, alongside a stable exchange rate. These factors have helped reduce inflation in recent months. The report predicts that March 2025 will see the lowest inflationary rise in decades due to a decline in the food, housing, and transport sectors.

Pakistan’s inflation has been a persistent concern, with the Consumer Price Index (CPI) reaching a peak of 38% in May 2023. However, the inflation rate has been on a decline since that high, with the CPI registering 1.5% on a year-on-year basis in February 2025, down from 2.4% in January 2025, according to data from the Pakistan Bureau of Statistics (PBS).

In response to inflation trends, the Monetary Policy Committee (MPC) maintained the policy rate at 12% in its last meeting, noting that February’s inflation was lower than expected, primarily due to a decrease in food and energy prices. 

However, the committee acknowledged the volatility of these prices, which could reverse the declining inflation trend. Core inflation remains stubbornly high, and an uptick in food and energy prices may push inflation higher in the coming months.

The Finance Division’s report indicated that while the recent month-on-month growth in Large Scale Manufacturing (LSM) signals resilience, the year-on-year decline reflects ongoing challenges that may continue to hinder industrial performance.

On the external front, the report indicated that exports, imports, and remittances are all expected to maintain an upward trajectory. Seasonal factors, such as Ramadan and Eid, are expected to drive an increase in remittances, while economic activity should boost exports and imports, helping to keep the current account in manageable limits.

The ministry also highlighted that favourable weather conditions are vital for agriculture, contributing to better harvests and helping to meet production targets. 

Regarding LSM, the report noted that positive growth indicators, such as increased cement sales, higher automobile production, and rising imports, suggest potential growth in production if demand conditions remain favourable.