Pakistan Inflation Hits a 9 Year Low in January 2025

Pakistan’s inflation rate dropped to 2.4% year-on-year in January 2025, marking its lowest level in over 9 years, as reported by the Pakistan Bureau of Statistics (PBS). This represents a notable decrease from December 2024, when it stood at 4.1%, continuing the trend of reduced price increases in the country.

On a month-to-month comparison, the Consumer Price Index (CPI) saw a slight rise of 0.2% in January, which is slightly higher than the 0.1% increase observed in December but much lower than the 1.8% rise seen in January 2024.

Arif Habib Limited attributes the decline in the annual inflation rate to both a high base effect and the reduction in food price inflation.

In the first seven months of the fiscal year 2025 (7MFY25), the average inflation rate was recorded at 6.5%, which represents a significant decline from 28.73% in the same period last year (7MFY24).

Inflation peaked at 38% in May 2023, but ongoing policy measures and regulatory steps have contributed to its steady decline.

The Finance Division praised government initiatives that have helped control inflation and stabilize the prices of necessary goods.

The decrease in inflation has also influenced the country’s monetary policy, with the State Bank of Pakistan (SBP) reducing the policy rate by 100 basis points to 12% in January, marking the sixth consecutive rate reduction since June 2024 when the rate stood at 22%.

Urban inflation was recorded at 2.7% year-on-year in January, down from 4.4% in December 2024. Rural inflation decreased to 1.9%, compared to 3.6% in the previous month.

On a month-to-month basis, both urban and rural inflation saw a 0.2% increase in January