February Inflation
ISLAMABAD: Inflation in Pakistan recorded a significant decline in February 2025, with the year-on-year (YoY) rate falling to 1.5%, marking the lowest level since September 2015. According to data released by the Pakistan Bureau of Statistics (PBS), this drop reflects a continued trend of easing inflationary pressures in the country.
The inflation rate in January 2025 stood at 2.4%, indicating a month-on-month decrease of 0.9% in February. This decline is in line with the ongoing economic stabilization efforts being pursued by the government and financial authorities.
On a broader scale, the average inflation rate for the first eight months of the fiscal year, from July 2024 to February 2025, was recorded at 5.85%. This represents a significant decrease compared to the 27.96% inflation rate observed during the same period in the previous fiscal year.
The sharp contrast underscores the impact of ongoing economic policies and efforts to bring price levels under control.
Further disaggregation of the data reveals that inflation in urban areas was recorded at 1.8% in February, while rural areas experienced an inflation rate of 1.1%. The decline across both segments highlights the broader economic stabilization underway.
Pakistan’s economic recovery has been supported by a $7 billion financial facility granted by the International Monetary Fund (IMF) in September 2024. This assistance has played a key role in stabilizing the economy, and authorities have credited the downward trend in inflation to measures implemented under the IMF programme.
The finance ministry, in its monthly economic outlook report released last week, had anticipated inflation to stabilize between 2.0% and 3.0% in February, continuing the declining trend observed over the past year. The ministry further projected a slight increase in inflation to a range of 3.0% to 4.0% by March 2025.
According to Waqas Ghani, head of research at JS Global, a favorable base effect from last year’s high inflation contributed to the notable decline.
He further noted that the data was primarily driven by a reduction in food inflation, with significant price decreases observed in staple food items. However, he cautioned that an uptick in food inflation is expected during the month of Ramadan due to seasonal demand pressures.
The latest inflation data suggests that Pakistan is making steady progress toward economic stabilization, aided by fiscal discipline and policy measures aimed at controlling price levels.
While inflation remains at its lowest level in nearly a decade, economic observers will closely monitor upcoming trends, particularly in light of anticipated inflationary pressures in the coming months.
