Inflation cools to 113-month low at 1.5% in Feb as slide continues

• Feb inflation beats finance ministry’s forecast.
• Consumer price inflation in Jan 2025 stood at 2.4%.
•  Urban inflation drops to 1.8%, while rural down at 1.1%.

ISLAMABAD: Marking its lowest level since September 2015, Consumer Price Index-based (CPI) inflation in Pakistan declined to 1.5% year-on-year (YoY) in February 2025 compared to 2.4% recorded in the first month of this year, according to data from the Pakistan Bureau of Statistics (PBS).

In February 2025, the headline inflation saw a month-on-month decline of 0.9% — in contrast with a 0.2% increase in January and no change recorded in February 2024.

The average inflation rate for the first eight months (July-February) of this fiscal year (8MFY25) clocked in at 5.85% — a massive decline compared to 27.96% recorded in the same period last year.

Breaking down the numbers further, inflation in urban areas dropped to 1.8% in February, while in rural areas, it came in at 1.1% for the month under review.

Pakistan, currently bolstered by a $7 billion facility from the International Monetary Fund (IMF) granted in September, is navigating an economic recovery. Authorities have credited inflation's downward trend to economic stabilisation under the IMF programme.

In its monthly economic outlook report released last week, the finance ministry figured that inflation in February would hover between 2.0-3.0%, continuing its downward trend from the previous year. 

The ministry also forecast a slight increase to 3.0-4.0% by March 2025.

"A favourable base effect from last year's high inflation contributed to this result. We anticipate an uptick in food inflation during Ramadan," said Waqas Ghani, head of research at JS Global.

He added that the data was primarily driven by a decline in food inflation, with significant price drops in staples.

— Additional input from Reuters