Pakistan’s Inflation Breaks 9-Year Record in February

Pakistan’s headline inflation stood at 1.5% in February 2025, lower than the 2.4% figure recorded in January, according to data from the Pakistan Bureau of Statistics (PBS). On a month-on-month basis, the Consumer Price Index (CPI) fell by 0.8% in February, compared with a 0.2% increase in January, and remained unchanged in February 2024. The average CPI inflation during 8MFY25 came in at 5.85%, dropping from 27.96% in 8MFY24. Analysts at Arif Habib Limited (AHL) called the February figure the weakest since September 2015. Inflation in Pakistan has been a long-running challenge, reaching a record 38% in May 2023 but easing since then. Days ago, the Finance Division predicted that headline inflation would stay between 2% and 3% in February and increase to 3-4% by March. In January, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) lowered the key interest rate by 100 basis points to 12%. It was the sixth rate cut since June 2024, when the rate was 22%. Governor SBP Jameel Ahmad later said inflation would dip in January but then move higher in the following months. The MPC will meet again on March 10. February’s inflation turned out even lower than most brokerage estimates. JS Global expected it to slide to 2.3%. Topline Securities also predicted a reading of 2.0-2.5%, which would put the 8MFY25 average at 6.07% against 27.96% in 8MFY24. Urban CPI dropped to 1.8% year-on-year in February 2025, down from 2.7% in January and 24.9% in February 2024. It also decreased 0.7% on a month-on-month basis. Rural inflation slipped to 1.1% from 1.9% a month earlier and 20.5% in February 2024. Month-on-month, it fell by 1.1% compared to a 0.2% bump in January and a 0.3% dip in February 2024.