Pakistan Inflation Expected to Drop Below 0.5% in April 2025

According to a report by Topline Securities, Pakistan’s overall inflation is anticipated to continue its downward trajectory, potentially falling below 0.5% in April 2025.

In March 2025, the nation’s inflation rate reached a 59-year low of 0.7% year-on-year (YoY). Data from the Pakistan Bureau of Statistics (PBS) indicated this was lower than the 1.5% recorded in February 2025.

Topline stated, “The Consumer Price Index (CPI) for Pakistan is projected to hit its lowest point in April 2025, registering below 0.50% YoY. Inflation is expected to fluctuate between 0.05% and 0.5% YoY (-0.8% MoM), bringing the 10MFY25 average to 4.87%, a significant decrease from the 26.22% observed in 10MFY24.”

“The anticipated decrease in inflation is mainly due to a substantial reduction in food and electricity costs,” the firm noted.

It’s worth mentioning that Pakistan’s inflation peaked at a record 38% year-on-year in May 2023, marking the highest point since records began in July 1965.

According to the report, food inflation is predicted to decline by 3.32% month-on-month (MoM) in April 2025. This is largely attributed to a 25% drop in fresh fruit prices, a 21% decrease in tomato and onion prices, and a 19% fall in egg prices. Conversely, the prices of milk, meat, spices, and pulses are expected to increase slightly, by an average of 0.2%.

The housing, water, electricity, and gas sector is projected to experience an approximate decrease of 0.02% MoM, driven by a 6.8% reduction in electricity costs and a 0.5% decrease in solid fuel (wood) prices.

“However, this adverse effect is likely to be mitigated by a 1.8% increase in rental costs. Our calculations include a fuel cost adjustment of negative Rs1.36/Kwh, a Quarterly Tariff Adjustment (QTA) of negative Rs1.9, and a Petroleum Development Levy (PDL)-led incentive of negative Rs1.71.”

The transport sector is also anticipated to see a 0.12% MoM decrease, influenced by a 0.4% decline in fuel prices.

Topline added, “Our inflation estimates are based on the average of SPI data for the weeks ending April 10 and 17 (with a cutoff of 11-14 of the month). However, using only the SPI reading from April 17, 2025, the CPI reading becomes negative, indicating a deflationary trend, falling within the range of -0.25% to 0.25% YoY.”

The brokerage house has revised its inflation forecast for FY25 downward, from 5-6% to 4.5-5.5%, citing declining electricity, oil, and food prices.

“Further details on this and other indicators will be provided in our quarterly economic report, scheduled for release at the end of April 2025,” the report concluded.