ISLAMABAD: Pakistan’s headline inflation is projected to remain between 2-3% in February 2025, with a slight increase to 3-4% anticipated in March, the Finance Division reported on Thursday.
In its Monthly Economic Update and Outlook, the ministry attributed the declining inflation to accommodative monetary policies and improved business confidence, which are expected to bolster the recovery of Large-Scale Manufacturing (LSM).
The report highlighted that inflation has been on a downward trend since hitting a record 38% in May 2023, dropping to 2.4% in January 2025, compared to 4.1% in December 2024, according to Pakistan Bureau of Statistics (PBS) data.
Last month, the Monetary Policy Committee (MPC) slashed the policy rate by 100 basis points to 12%, marking a cumulative cut of 1,000 basis points since June 2024. The decision was based on moderate domestic demand and stable supply-side dynamics, the report stated.
External Outlook
On the external front, exports, imports, and workers’ remittances are expected to maintain their upward trajectory.
The report noted that remittances would likely rise further due to seasonal factors such as Ramadan, Eid-ul-Fitr, and Eid-ul-Adha, while expanding economic activity would support export and import growth. These developments are expected to keep the current account deficit (CAD) within manageable limits.
