Inflation to hit 60-year low in April 2025

KARACHI:

Pakistan’s inflation is expected to bottom out and hit a six-decade low in April 2025, with the Consumer Price Index (CPI) likely to ease to just 0.3% year-on-year (YoY), down from 0.7% in March.

Research Head of JS Global, Muhammad Waqas Ghani wrote in a report, “Following a 0.7% YoY increase in March 2025, Pakistan’s Consumer Price Index (CPI) is expected to fall further to 0.3% YoY in April 2025—marking a six-decade low and reinforcing the country’s sharp disinflationary trend”.

This significant decline is largely attributed to lower food inflation and a favourable base effect, as headline inflation was extremely high during the same period last year. As a result, the average inflation for the first ten months of FY25 (10MFY25) is projected to decline to 4.9%, compared to 26.2% during 10MFY24.

“Pakistan’s CPI for April 2025 is expected to bottom out, registering below 0.50% YoY,” said Director Research of Topline Securities, Shankar Talreja. Inflation is projected to range between 0.05% and 0.50% YoY, translating into a month-on-month (MoM) deflation of approximately -0.8%. This would bring the 10MFY25 average inflation to 4.87%, “sharply lower than the 26.22% recorded during the same period in FY24,” he wrote in his report.

Food inflation, which makes up 35% of the CPI basket, is expected to post a steep YoY drop of 5.7% in April 2025, compared to 9.7% in April 2024, according to Ghani. The decline is attributed to substantial reductions in prices of essential food items such as rice, potatoes, tomatoes, wheat, and onions. On a monthly basis, food inflation is projected to decrease by 3.32%, led by a 25% drop in fresh fruit prices, a 21% fall in tomato and onion prices, and a 19% decline in egg prices. In contrast, prices of milk, meat, spices, and pulses are expected to rise only marginally—by an average of 0.2%, Talreja explained.

Meanwhile, core inflation—which excludes the more volatile food and energy components—is expected to stand at 7.7% YoY in April, with a modest MoM increase of 40 basis points. In March 2025, core inflation hovered around 10%, with urban core at 8.2% and rural core at 10.2%.