Inflation in Pakistan dropped to a historic low in March 2025, with the Consumer Price Index (CPI) rising just 0.7 per cent year-on-year. This marks a sharp decline from February’s 1.5 per cent, according to data released by the Pakistan Bureau of Statistics (PBS) on Thursday. Analysts at Arif Habib Limited highlighted that this is the lowest inflation rate recorded since December 1965.
On a month-on-month basis, inflation rose by 0.9 per cent in March, reversing the 0.8 per cent drop seen in February. For comparison, in March 2024, prices had surged by 1.7 per cent.
Over the first nine months of the fiscal year 2025 (9MFY25), average inflation stood at 5.25 per cent— a massive drop from the 27.06 per cent recorded in the same period last year. Inflation had peaked at a staggering 38 per cent in May 2023 but has been on a downward trend ever since.
The Finance Division had anticipated inflation for March to stay between 1 and 1.5 per cent, and it now expects a slight uptick to 2-3 per cent in April.
The Monetary Policy Committee (MPC), in its latest meeting, decided to keep the interest rate unchanged at 12 per cent. While food and energy prices helped drive inflation lower in February, the committee cautioned that price fluctuations in these sectors could still pose risks. Core inflation, which excludes volatile food and energy prices, remains stubbornly high.
In cities, inflation eased to 1.2 per cent in March, compared to 1.8 per cent in February and a much higher 21.9 per cent in March 2024. On a monthly basis, urban inflation rose 0.8 per cent, after falling by 0.7 per cent the previous month.
Meanwhile, rural inflation remained unchanged year-on-year at 1.1 per cent, a drastic contrast to the 19 per cent recorded in March last year. However, prices in rural areas rose by 1.1 per cent compared to February’s 1.1 per cent decline.
Analysts had widely expected inflation to remain between 0.5 and 1 per cent for March, making it the lowest yearly inflation rate in over three decades.
