KARACHI – Pakistan’s inflation rate dropped to 0.7 percent year-on-year in March 2025 – the lowest since December 1965, data shared by Pakistan Bureau of Statistics (PBS) revealed.
The fresh data shows headline inflation at lowest in nearly six decades, as major drop comes after 1.5% inflation rate in February 2025. On a month-to-month basis, the Consumer Price Index (CPI) saw a 0.9% increase in March, reversing February’s 0.8% decline and surpassing the 1.7% rise recorded in March 2024.
The March inflation rate is lowest since December 1965, which represents remarkable 59-year low, as highlighted by Arif Habib Limited (AHL). The average CPI inflation for first nine months of FY 2025 stood at 5.25%, a sharp contrast to the 27.06% recorded during the same period in 2024.
Pakistan Inflation
Source: tradingeconomics
The country with an economy of $350billion faced persistent inflation challenge in recent years, with CPI soaring to a historic high of 38% in muid 2023, but the country revived in inflation since then. Finance Division had previously predicted that inflation in March would range between 1% and 1.5%, with a slight increase expected in April 2025 to around 2-3%.
State Bank of Pakistan’s (SBP) Monetary Policy Committee (MPC) maintained its policy rate at 12pc in its recent meeting, citing the lower-than-expected inflation in February. While the MPC welcomed the drop in inflation, it also cautioned that volatility in food and energy prices, combined with persistent core inflation, could lead to inflationary pressure in the months ahead.
Urban inflation dropped to 1.2pc YoY, down from 1.8% in February and a sharp contrast to 21.9% in March 2024. Month-on-month, urban inflation increased by 0.8%, following a 0.7% decline in February.
In rural areas, inflation remained stable at 1.1% year-on-year, the same as in February 2025 and significantly lower than the 19% recorded in March 2024. On a month-to-month basis, rural inflation increased by 1.1%, reversing February’s 1.1% decrease.
As inflation is on downward trend, economists warn that volatility in food and energy prices could disrupt the stability in the coming months. The coalition government is also facing challenge to maintain this positive trend and avoid another surge in inflation while fostering economic stability.
