Pakistan’s Inflation Set for a Steady Decline as Base Effect Fades

Karachi: Pakistan’s Consumer Price Index (CPI) is expected to register at 2.7% for May 2025, according to an analysis by JS Global. The fading base effect indicates a return to more stable price trends, with the 11-month average inflation for fiscal year 2025 projected to reduce significantly to 4.7%, down from the previous year’s average of 24.9%.

The rapid decline in inflation throughout the year has led to a revised forecast for the fiscal year 2025, with an average CPI expected to settle at 4.6%. The rolling 12-month forward CPI is estimated to be approximately 5.7%.

In response to the declining inflation, the State Bank of Pakistan (SBP) reduced its policy rate to 11% during its last Monetary Policy Committee (MPC) meeting. Further rate cuts, ranging from 50 to 100 basis points, remain a possibility in the near term. The SBP’s next MPC meeting is scheduled for June 16, 2025.

The current economic outlook reflects a significant shift from the high inflation rates experienced in the previous fiscal year, suggesting a more stable economic environment moving forward.