Over 9-year low: Inflation in Pakistan clocks in at 2.4% in January 2025

Pakistan’s headline inflation clocked in at 2.4% on a year-on-year basis in January 2025, a reading below that of December 2024 when it stood at 4.1%, showed Pakistan Bureau of Statistics (PBS) data on Monday.

On a month-on-month basis, CPI increased by 0.2% in January 2025 as compared to 0.1% in the previous month and an increase of 1.8% in January 2024.

This is the “lowest reading in 111 months,” said Topline Securities.

Experts attributed the decline in inflation to a high base effect and lower food inflation.

CPI inflation average during 7MFY25 stood at 6.5% as compared to 28.73% in 7MFY24.

Inflation in Pakistan has been a significant and persistent economic challenge, particularly in recent years. In May 2023, the CPI inflation rate hit a record high of 38%. However, it has been on a downward trajectory since then.

Days ago, the Finance Division said that policy interventions and administrative actions successfully controlled inflation, leading to a reduction in the prices of essential items.

Last month, in line with expectations, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) reduced the key policy rate by 100 basis points (bps), taking it down to 12%.

This was the sixth successive cut in the key interest rate since June 2024 when it stood at 22%.

After the policy rate decision, Governor SBP Jameel Ahmad told a presser that inflation would ease further in January before inching up in the subsequent months.

Meanwhile, the latest CPI reading was even lower than the projections made by several brokerage houses.

JS Global projected inflation reading to clock below 3% in January.

“Ongoing sharp disinflation trend is expected to persist, with Jan-2025 CPI likely to fall to 2.8% (lowest since Nov-2015 owing to a high base affect), despite 0.6% MoM uptick,” the brokerage house said.

A similar reading was given by Ismail Iqbal Securities Limited, another brokerage house.

“Inflation for Jan’25 is projected at 2.9%, sharply down from 28.3% the same period last year, reflecting a significant easing in price pressures,” it said.

Urban, rural inflation

The PBS said CPI inflation urban decreased to 2.7% on year-on-year basis in January 2025 as compared to 4.4% in the previous month and 30.2% in January 2024.

On month-on-month basis, it increased to 0.2% in January 2025 as compared to negative change of 0.1% in the previous month and an increase of 1.8% in January 2024.

CPI inflation rural decreased to 1.9% on year-on-year basis in January 2025 as compared to 3.6% in the previous month and 25.7% in January 2024.

On month-on-month basis, it increased by 0.2% in January 2025 as compared to 0.3% in the previous month and an increase of 1.9% in January 2024.