Pakistan inflation projected to remain within range of 4.5-5% in FY25
ISLAMABAD: Inflation is projected to remain within the range of 4.5-5 percent during fiscal year 2025, supported by a sharp decline in the prices of perishable food items and adequate stocks of key non-perishable commodities, noted the Economic Survey 2024-25.
Consumer Price Index (CPI) inflation decreased to 4.7 percent during July-April fiscal year 2025, down from 26 percent in the same period last year.
However, the survey released on Monday revealed that health and education - saw notable inflation of 14.5 percent and 11.6 percent respectively in the outgoing fiscal year 2025, indicating continued cost pressures in medical goods and services and persistent increases in tuition fees and educational expenses. Energy prices have also stayed contained, benefiting from lower global oil prices, a stable exchange rate, and a favourable base effect.
After historic lows, inflation expected to tick up in Pakistan
Over the medium term, inflation is expected to gradually return to normal levels during fiscal year 2026 and fiscal year 2027, driven by anticipated improvements in the agriculture sector and more favourable global and domestic economic conditions.
CPI inflation, which stood at 11.1 percent year-on-year in July 2024, marked a significant decline from 28.3 percent in July 2023. This downward trend persisted, with inflation hitting as low as 1.5 percent in February 2025, the lowest since September 2015. The trend continued, with inflation further easing to 0.7 percent by March 2025 and remarkably dropping to 0.3 percent in April 2025, a multi-decade low. This decline in inflation in Pakistan can also be attributed to several factors, including improved food availability, decreased energy prices, and excess production capacity. The easing of inflation is also influenced by the decline in commodity prices globally, primarily driven by improved energy supplies and food.
They survey noted that in fiscal year 2025, clothing and footwear recorded the higher inflation among all CPI components at 14.4 percent though it marked a decline from 19.8 percent in FY 2024. This suggests that price pressures in this category remain elevated. Following this, health saw a notable inflation of 14.5 percent, down from 22.1 percent, indicating continued cost pressures in medical goods and services, though at a slower pace.
Education also experienced relatively high inflation at 11.6 percent, nearly stable compared to 12.4 percent last year, reflecting persistent increases in tuition fees and educational expenses. The category of housing, water, electricity, gas, and other fuels remained an important contributor, posting 8.5 percent inflation due to its large weight in the CPI basket, despite a sharp fall from 28.4 percent a year earlier.
Inflation dynamics across South Asia and the broader region presented a mixed picture over the past year, reflecting a combination of domestic policies, global supply chain shifts, and geopolitical pressures. A snapshot of inflationary trends in Pakistan, India, Bangladesh, Sri Lanka, and Iran reveals diverse challenges and recovery paths.
Pakistan experienced a sharp decline in inflationary trend, with inflation falling from a peak of 20.7 percent in March 2024 to just 0.3 percent by April 2025. This slowdown reflects a combination of tight monetary policy, improved food supply conditions, and a high base effect.
India maintained moderate and stable inflation, hovering between 3.3 percent and 6.2 percent throughout the year. Bangladesh continued to face persistent inflation, with rates staying in the 9.0 percent to 11.7 percent range. Structural pressures, including currency depreciation, elevated import costs, and energy price adjustments, contributed to the sticky inflation.
Sri Lanka exhibited deflationary trend, especially from September 2024 to April 2025, with inflation dipping to -2.0 percent in April 2025. Iran continued to grapple with elevated inflation, with rates consistently above 30 percent, peaking at 37.1 percent in March 2025, the Survey noted.
Copyright Business Recorder, 2025
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