Pakistan Inflation Expected to Dip Below 0.5% by April 2025

According to a recent analysis by Topline Securities, Pakistan’s primary inflation rate is projected 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 that this figure was lower than the 1.5% recorded in February 2025.

Topline stated, “The Consumer Price Index (CPI) for Pakistan in April 2025 is anticipated to hit its lowest point, 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% recorded in 10MFY24.”

The report further noted, “The expected decrease in inflation is primarily attributed to a substantial reduction in both food and electricity costs.”

It is worth recalling that Pakistan’s inflation rate peaked at a record 38% year-on-year in May 2023, marking the highest level since record-keeping began in July 1965.

The report anticipates that food inflation will decline by 3.32% month-on-month (MoM) in April 2025, mainly influenced by a 25% drop in fresh fruit prices, a 21% decrease in tomato and onion prices, and a 19% decrease in egg prices. Conversely, the prices of milk, meat, spices, and pulses are expected to increase marginally, by an average of 0.2%.

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

“However, this downward pressure is expected to be partially offset by a 1.8% increase in rental costs. Our analysis includes 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, driven by a 0.4% reduction in fuel prices.

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

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

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