Islamabad, February 3, 2025 – Pakistan’s headline inflation based on the Consumer Price Index (CPI) dropped to 2.4% in January 2025, marking the lowest level in 111 months.
This significant decline in inflation indicates a notable slowdown in price increases compared to previous years, offering some relief to consumers.
The CPI inflation General rate decreased to 2.4% year-on-year in January 2025, compared to 4.1% in December 2024 and 28.3% in January 2024. On a month-on-month basis, however, inflation rose slightly by 0.2%, reflecting minor price fluctuations.
Mohammad Sohail, CEO of Topline Securities Limited, stated that Pakistan’s inflation rate for January 2025 clocked in at 2.41%, the lowest reading in over nine years. This decline suggests that government policies aimed at curbing price hikes may be having an impact.
Urban CPI inflation dropped to 2.7% YoY in January 2025 from 4.4% the previous month and 30.2% in January 2024. On a MoM basis, urban inflation rose slightly by 0.2%. Meanwhile, rural CPI inflation also fell to 1.9% YoY in January 2025, down from 3.6% in December 2024 and 25.7% a year ago. MoM rural inflation increased by 0.2%, suggesting stable price trends in non-urban areas.
The Sensitive Price Indicator (SPI) inflation dropped to 0.7% YoY, down from 4.2% in December and 36.2% in January 2024, while the Wholesale Price Index (WPI) inflation also showed a sharp decline, registering 0.6% YoY, compared to 1.9% last month and 27.0% in January 2024. These figures indicate a broad-based easing in price pressures across multiple economic sectors.
Core inflation, measured by the non-food, non-energy Urban Index, dropped to 7.8% YoY in January 2025 from 8.1% a month earlier and 17.8% a year ago. The Rural Core Index showed a similar trend, declining to 10.4% YoY from 10.7% in December and 24.6% in January 2024.
The Trimmed Mean Core Inflation index, an alternative measure that excludes volatile items, also reflected cooling price pressures. The urban trimmed inflation rate fell to 5.4% YoY, while the rural trimmed inflation rate also declined to 5.4% YoY.
Overall, the continuous drop in inflation over recent months indicates that Pakistan’s economy is witnessing a much-needed period of price stabilization. However, economists warn that global commodity prices and local fiscal policies will play a crucial role in determining future inflation trends.