Pakistan Inflation Expected to Drop Below 0.5% in April 2025

According to a report by Topline Securities, Pakistan’s primary inflation rate is projected to sustain its downward trajectory, potentially dipping below 0.5% in April 2025.

Official data from the Pakistan Bureau of Statistics (PBS) indicates that the nation’s inflation reached a 59-year low of 0.7% year-on-year (YoY) in March 2025. This figure is lower than the 1.5% recorded in February 2025.

Topline stated, “Pakistan’s Consumer Price Index (CPI) for Apr 2025 is anticipated to reach 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 notable decrease from the 26.22% recorded in 10MFY24.”

The brokerage firm added, “This lower inflation forecast is primarily attributed to significant declines in food and electricity costs.”

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

The report suggests that food inflation during April 2025 is likely to fall by 3.32% month-on-month (MoM), mainly driven by a 25% decrease in fresh fruit prices, a 21% reduction in tomato and onion prices, and a 19% drop in egg prices. Conversely, the prices of milk, meat, spices, and pulses are expected to increase marginally by approximately 0.2% on average.

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

“However, this adverse impact is expected to be offset by a 1.8% increase in rental costs. We have factored in 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 experience a 0.12% MoM decrease, supported by a 0.4% decline in fuel prices.

Topline explained, “Our inflation estimates are derived from the average Sensitive Price Indicator (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 reading from April 17, 2025, the CPI reading turns negative, indicating a deflationary trend, falling between -0.25% and 0.25% YoY.”

For FY25, the brokerage house has adjusted its inflation prediction downward from 5-6% to 4.5-5.5%, “due to decreasing electricity, oil, and food prices.”

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