Pakistan records lowest inflation in 711 months, CPI at 0.7% in March

• Inflation slowed to 1.2% YoY in March from 1.8% in February.
• Policymakers welcome continued moderation of headline inflation.
• Rural inflation unchanged YoY in March, compared to 1.1% in February.
  

KARACHI: Pakistan's Consumer Price Index (CPI) inflation has hit a historic low, with the reading dropping to 0.7% year-on-year in March 2025— the lowest in 711 months since December 1965.

The Consumer Price Index (CPI) inflation rose 0.7% year-on-year (YoY) in March 2025, down from 1.5% in the previous month and significantly lower than the 20.7% recorded in March 2024, according to the Pakistan Bureau of Statistics (PBS).

The data suggests that CPI inflation increased by 0.9% month-on-month (MoM) in March 2025 compared to a 0.8% decrease in the previous month.

“This is the lowest reading since December 1965, i.e. 59-year low, according to SBP data,” said Arif Habib Limited (AHL) in a report.

CPI inflation during 9MFY25 averaged 5.25% as compared to 27.06% in 9MFY24.

Urban CPI inflation slowed to 1.2% year-on-year (YoY) in March 2025 from 1.8% in February 2025 and 21.9% in March 2024. The month-on-month increase for urban CPI was 0.8% in March 2025, following a 0.7% decrease in the previous month.

Policymakers will likely welcome the continued moderation of headline CPI inflation. The State Bank of Pakistan will need to balance the need to support economic growth to maintain price stability. In its meeting last month, the SBP decided to pause its rate cuts, maintaining the interest rate at 12%.

According to the PBS, rural CPI inflation showed no change YoY in March 2025, compared to 1.1% in the previous month and 19.0% in March 2024. On a month-on-month basis, rural CPI inflation rose by 1.1% in March 2025 after a 1.1% decrease in February 2025.

The Sensitive Price Indicator (SPI) inflation decreased to 2.3% year-on-year in March 2025, compared to 0.2% in the previous month. The Wholesale Price Index (WPI) inflation decreased by 1.6% year-on-year in March 2025, following a 0.7% decrease in the prior month and a 14.8% increase in March 2024, the data shows.

The data further reveals that the National Consumer Price Index for March 2025 increased by 0.89% over February 2025 and 0.69% over March 2024. Food prices, which carry the highest weight in the CPI basket (34.6%), remain a major concern. The food index stood at 278.3 in March 2024, showing a 5.1% increase year-over-year.

Month-on-month, key increases were seen in items like tomatoes (36.35% in urban areas), fresh fruits (18.66% in urban areas), and eggs (14.92% in urban areas). Conversely, the prices of some food items decreased, including onions (14.89% in urban areas), tea (7.69% in urban areas), and potatoes (6.83% in urban areas).

Year-on-year, there were substantial increases in the prices of items like pulse moong (31.02% in urban areas) and butter (23.84% in urban areas), while prices of onions and tomatoes showed sharp declines. This highlights the continued struggle for households to manage their budgets amid rising food costs.

Housing, with a weight of 23.6%, also contributed to the overall inflation, showing a 2.2% year-over-year increase. Transport costs saw a 1.2% decline year-over-year, providing some relief to consumers.

Clothing and footwear, education and health saw significant year-over-year increases of 13.5%, 11.9%, and 13.8%, respectively.

Non-food, non-energy (NFNE) inflation in urban areas edged up to 8.2% year-on-year in March 2025 from 7.8% in February 2025 and 12.8% in March 2024. NFNE inflation in rural areas decreased to 10.2% year-on-year in March 2025, compared to 10.4% in the previous month and 20.0% in March 2024.

Urban trimmed mean inflation (20% weighted) increased to 4.8% year-on-year in March 2025, up from 4.6% in the prior month and 14.8% in March 2024. Rural trimmed mean inflation (20% weighted) decreased to 4.8% year-on-year in March 2025, compared to 5.2% in February 2025 and 18.4% in March 2024.