Karachi, April 21, 2025 – A recent report from Topline Securities Limited suggests that Pakistan’s inflation rate for April 2025, based on the Consumer Price Index (CPI), is likely to fall below 0.5%.
The CPI for April is expected to reach a range of 0.05% to 0.5% year-on-year (YoY), showing a decrease of approximately 0.8% month-on-month (MoM). This marks a significant improvement from the same period last year when the CPI was much higher, with the 10-month fiscal year 2025 (10MFY25) average expected to be 4.87%, a sharp contrast to the 26.22% recorded during the same period in FY24.
The anticipated decrease in inflation for April 2025 is largely attributed to a significant reduction in food and electricity prices. Food inflation is projected to decline by 3.32% MoM, driven by a 25% decrease in fresh fruit prices, a 21% drop in tomato and onion prices, and a 19% fall in egg prices. Despite these decreases, prices of milk, meat, spices, and pulses are expected to rise modestly by about 0.2% on average.
The housing, water, electricity, and gas sector is also projected to see a slight decline of 0.02% MoM due to a 6.8% decrease in electricity prices and a 0.5% reduction in solid fuel (wood) prices. However, these decreases are likely to be offset by a 1.8% increase in rent costs. The transport sector is also expected to witness a minor drop of 0.12% MoM, primarily due to a 0.4% fall in fuel prices.
Analysts based the inflation estimates on the average of the Sensitive Price Indicator (SPI) data from April 10 and April 17, 2025. However, the April 17 SPI reading suggests a potential deflationary trend, with inflation possibly falling within a range of -0.25% to 0.25% YoY.
Looking ahead to FY25, the inflation forecast has been revised down from an earlier range of 5-6% to 4.5-5.5%, driven by falling electricity, oil, and food prices. The full details will be provided in the upcoming quarterly economy report, scheduled for release at the end of April 2025.
The report also highlights that with inflation expectations ranging from -0.25% to +0.25% for April, real rates are set to surge to 1200 basis points (bps), far exceeding Pakistan’s historical average of 200-300 bps. Fitch Ratings has also noted in its recent review that Pakistan’s inflation is expected to average 5% for FY25 before rising to 8% in FY26. However, analysts caution that any significant changes in commodity prices, particularly oil prices, could alter these inflation projections.