Pakistan Inflation Expected to Drop Below 0.5% in April 2025

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

Official data from the Pakistan Bureau of Statistics (PBS) indicates that the country’s inflation rate 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 Securities stated, “The Consumer Price Index (CPI) for Pakistan is anticipated to reach 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% Month-over-Month), resulting in a 10MFY25 average of 4.87%, a considerable decrease compared to the 26.22% recorded in 10MFY24.”

The firm added, “This anticipated reduction in inflation is largely attributed to substantial decreases in both food and electricity costs.”

It’s worth noting that Pakistan’s inflation rate peaked at a record 38% YoY in May 2023, marking the highest level since data collection began in July 1965.

The report suggests that food inflation is likely to decline by 3.32% MoM in April 2025. This is primarily due to significant price drops, including a 25% decrease 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 projected to increase by a modest 0.2% on average.

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

The report further explains, “However, this negative influence is likely to be partially counteracted by a 1.8% increase in rental costs. Our analysis incorporates 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 projected to see a 0.12% MoM decrease, influenced by a 0.4% reduction in fuel prices.

Topline Securities clarified, “Our inflation estimations are derived from the average SPI data from the weeks ending April 10 and 17 (given the cutoff of the 11th-14th of the month). However, using only the SPI reading from April 17, 2025, the CPI reading turns negative, pointing towards a deflationary trend, fluctuating between -0.25% and 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.

The report concludes, “More detailed information on this and other indicators will be provided in our quarterly economic report, scheduled for release at the end of April 2025.”