Pakistan’s Inflation Rate Hits Historic Low, Sparks Interest Rate Speculations

Karachi: Pakistan’s Consumer Price Index (CPI) is projected to drop to 0.3% in April 2025, marking the lowest level in over six decades. The decline is largely attributed to a significant decrease in food inflation, which is anticipated to see a year-on-year drop of 5.7% in April. This trend is expected to lower the average inflation rate for the first ten months of the fiscal year 2025 to 4.9%, a sharp decline from the previous fiscal year’s average of 26.2%.

The disinflationary trend has led analysts to forecast an average CPI of 5.0% for the fiscal year 2025. The 12-month forward CPI estimate is currently projected at approximately 6.4%.

In response to the declining inflation rates, the State Bank of Pakistan (SBP) maintained steady interest rates during its last Monetary Policy Committee (MPC) meeting. However, with inflation figures falling below expectations, there is speculation that a rate cut of 50 to 100 basis points could be considered in the near future. The SBP’s upcoming MPC meetings are scheduled for May 5th and June 16th, 2025.

The ongoing disinflationary momentum and its impact on monetary policy are being closely monitored by economic analysts and policymakers.