The Ministry of Finance anticipates a slight uptick in inflation reading in April.
Key Highlights
- Headline inflation expected to stay within 1-1.5% in March.
- Slight increase to 2-3% projected for April.
- Recent LSM growth signals resilience but underlying weaknesses persist.
Inflation Trends in Pakistan
Inflation has been a significant economic challenge, with CPI hitting a record high of 38% in May 2023. However, it has been on a downward trajectory since then. In February 2025, headline inflation was recorded at 1.5% year-on-year.
Monetary Policy Committee (MPC) Stance
The MPC has maintained a stable policy rate at 12%, noting that inflation in February 2025 was lower than expected due to drops in food and energy prices. However, the committee remains cautious due to the inherent volatility in these prices and the persistence of core inflation.
External Account Projections
Exports, imports, and remittances are expected to maintain their upward trend. Seasonal factors such as Ramzan and Eids are likely to further boost remittances. Improvements in economic activity will also contribute to better exports and imports, helping to keep the current account within manageable limits.
Agriculture and LSM Insights
Favourable weather conditions are crucial for ensuring better harvests and meeting production targets. High-frequency indicators, such as positive growth in cement sales, increased automobile production, and higher imports, suggest a potential uptick in LSM production, provided demand conditions remain supportive.
Expert Projections
JS Global, a brokerage house, projected Pakistan’s headline inflation to fall to 0.7% in March 2025, lower than the 1.5% recorded in the previous month.
Summary of Key Economic Indicators
| Indicator | Projection/Status |
|---|---|
| March 2025 Inflation | 1-1.5% |
| April 2025 Inflation | 2-3% |
| February 2025 Inflation | 1.5% (YoY) |
| Policy Rate | 12% (Stable) |