Pakistan inflation expected to drop further to below 0.5% in April 2025, says brokerage house

Pakistan’s headline inflation is expected to continue its declining trend and drop further to below 0.5% in April 2025, as per a report by brokerage house Topline Securities.

Inflation in the country stood at 59-year low of 0.7% on a year-on-year (YoY) basis in March 2025, a reading below that of February 2025 when it stood at 1.5%, showed Pakistan Bureau of Statistics (PBS) data.

“Pakistan’s Consumer Price Index (CPI) for Apr 2025 is expected to bottom out and clock in below 0.50% YoY. The inflation is expected to remain in range of 0.05% to 0.5% YoY (-0.8% MoM,) taking 10MFY25 average to 4.87% compared to 26.22% in 10MFY24,” Topline said.

“The inflation is expected to be lower due to significant fall in food and electricity prices.”

It may be noted that inflation reading in Pakistan rose to a record 38% on a year-on-year basis in May 2023, the highest level since data was made available beginning July 1965.

During Apr 2025, as per the report, food inflation is expected to decrease by 3.32% month-on-month (MoM) mainly on the 25% decrease in fresh fruit prices, 21% decrease in tomatoes and onion prices and 19% decrease in prices of eggs. While prices of milk, meat, spices and pulses are expected to rise by merely 0.2% on average.

Housing, water, electricity and gas segment is expected to witness approx. a fall of 0.02% MoM due to decrease in electricity by 6.8%, and 0.5% decrease in solid fuel (wood) prices.

“However, this negative impact is likely to offset by 1.8% increase in rent. We have assumed fuel cost adjustment of negative Rs1.36/Kwh, Quarterly Tariff Adjustment (QTA) of negative Rs1.9, and PDL [Petroleum Development Levy] led incentive of negative Rs1.71.”

Transport segment is expected to also witness a fall of 0.12% MoM on the back of a 0.4% fall in fuel prices.

“We have arrived at our inflation estimates using avg. of SPI data of week ending Apr 10 and 17 (as cut-off is 11-14 of month). However, with SPI [Sensitive Price Indicator] reading of only Apr 17, 2025, the CPI reading turns negative, showing deflationary trend, falling in range of -0.25% to 0.25% YoY,” Topline said.

For FY25, the brokerage house revised down its inflation forecast from 5-6% to 4.5-5.5% “owing to falling electricity prices, oil prices and food prices”.

“We will issue more details on this and on other indicators in our quarterly economy report, to be released in end Apr 2025,” the report said.