IslamabadIt is expected that the inflation based on the consumer price index (CPI) in Pakistan will remain stable in February, but it is likely to decline a little in March, and the financing department expected in its last report was on Thursday.
According to “monthly economic update and expectations” for the month of February 2025, inflation is expected to remain within the 2-3 % range for February, with a slight increase to 3-4 % by March. This rise is due to the seasonal increase in food prices during the holy month of Ramadan, which begins on March 2. During this period, high home spending on food, drinks and other eating leads to inflationary pressure, which analysts expect to contribute to the expected rise in the inflation rate.
The report also highlighted that it is expected to reduce inflationary pressures throughout the year, with the support of a favorable monetary policy. This trend is expected to enhance a more stable financial environment, which enhances work confidence and support for recovery in widespread manufacturing (LSM), despite the slow recovery of the sector. The report also indicated that the industries directed towards export continued to grow, even when LSM witnessed a slower recovery.
The financing division expectations were martyred to reduce inflation as a major factor that allowed the State Bank in Pakistan to reduce the standard interest rate by 100 basis points to 12 % in January. This pieces have been part of the broader cash dilution cycle after a series of discounts in aggressive prices during the past six months, which aim to stimulate growth and control of inflation.
Last year, SBP reduced its rate of historic level of 22 % in June 2024, one of the most important price cuts between emerging markets. These cuts were aimed at managing inflation, which reached 38 % in May 2023 but since then showed signs of relief. The inflation based on the documentary price index to the documentary price index to CPI was 2.4 % on an annual basis, a decrease from 4.1 % in December 2024, according to the data of the Pakistani Statistical Office (PBS).
The Finance Division report indicated that inflationary pressures have diluted through moderate local demand and favorable width aspect factors. These conditions, along with low interest rates, have provided a more stable financial environment, allowing SBP to maintain its policy of gradual price cuts.
The report also referred to positive developments in transfers and foreign direct investment (FDI), which strengthened economic feelings. These factors are expected, along with the growth of strong export and import, will maintain the inability of the current account under control in the coming months. Moreover, the report expects that seasonal factors such as Ramadan, Eid Al -Fitr, and Eid Al -Mahatah will lead higher remittances, adding more support to the country’s economic expectations.
In the future, the Finance Department expected that exports and imports will continue to improve, with the support of expansion of economic activity. This positive trend, along with increasing transfers, is expected to maintain a stable external environment and support growth in the coming months.
