Pakistan’s headline inflation slowed to 0.7% year-on-year in March 2025, its lowest point since December 1965, according to data issued by the Pakistan Bureau of Statistics (PBS) on Thursday.
In February, inflation had clocked in at 1.5%, with the Ministry of Finance projecting the March value to be between 1 and 1.5%. In March 2024, inflation had stood at 20.7%. On a month-on-month basis, inflation increased by 0.9% in March 2025 compared to a decrease of 0.8% in February and an increase of 1.7% in March 2024.
According to the PBS, the slowing of inflationary pressures is largely due to declining prices of wheat and various other food commodities, as well as a reduction in electricity charges and fuel prices.
The CPI inflation decreased to 1.2% year-on-year in urban areas during March compared to 1.8% the month prior and 21.9% in March 2024. On a month-on-month basis, it increased by 0.8% in March compared to a decrease of 0.7% in February and an increase of 1.4% in March 2024.
In rural areas, CPI inflation showed no change on year-on-year basis in March compared to 1.1% in February and 19% in March 2024. On a month-on-month basis, it increased by 1.1% in March 2025 compared to a decrease of 1.1% in the previous month and an increase of 2.1% in March 2024.
In urban settings, the prices of pulse moong (31.02%), butter (23.84%), besan (21.66%), honey (21.02%), milk powder (20.63%), pulse gram (19.42%), sugar (18.75%), fresh fruits (18.31%), chicken (17.20%), meat (15.87%), vegetable ghee (15.69%), fish (13.42%), mustard oil (11.81%), milk fresh (11.20%) and cooking oil (11.08%) all saw increases. However, reductions were witnessed in onions (71.15%), tomatoes (53.77%), wheat (34.53%), wheat flour (34.52%), fresh vegetables (31.36%), tea (17.13%), pulse mash (15.41%), wheat products (12.51%), and pulse masoor (12.39%).
In the non-food category, increases were recorded in motor vehicle tax (168.79%), footwear (31.89%), dental services (27.20%), medical tests (15.53%), and drugs and medicines (15.26%). At the same time, prices decreased for electricity charges (21.65%), motor fuel (7.01%), liquefied hydrocarbons (3.77%), communication apparatus (1.28%) and washing soap/detergents/match box (0.79%).
In rural areas, the prices of food items that increased included pulse moong (29.40%), milk powder (26.72%), besan (21.35%), meat (21.17%), honey (19.97%), pulse gram (19.94%), fresh fruits (19.15%), sugar (18.55%), chicken (16.76%), butter (16.36%), vegetable ghee (15.92%) and cooking oil (14.69%). Food items that saw decreases included onions (71.13%), tomatoes (56.33%), wheat flour (36.38%), wheat (34.83%), fresh vegetables (34.25%), tea (15.38%), wheat products (15.14%), and pulse mash (13.39%).
In the non-food category, rural areas saw boosts to motor vehicle tax (126.61%), education (25.88%), dental services (19.53%), drugs and medicines (17.23%), recreation and culture (16.43%), cotton cloth (13.69%), tailoring (12.71%), plastic products (12.47%) and stationery (12.34%). Prices fell, however, for electricity charges (21.65%), motor fuels (7.71%), liquefied hydrocarbons (4.79%) and washing soaps, detergents and matchboxes (0.65%).
Right direction
In a statement hailing the decline, Prime Minister Shehbaz Sharif recalled that the PMLN’s election manifesto had called for bringing inflation down to single digits. Noting the inflation rate was at its lowest level in six decades, he stressed that even during the month of Ramzan—traditionally a booster of inflationary pressures—the inflation rate was at its lowest level of several decades.
He maintained that the reduction in the inflation rate was proof the government was working for the public welfare had was headed in the right direction. He said the reduction in the inflation rate has positive effects for all segments of society.
However, analysts have primarily attributed the significant slowdown in inflation to the high base effect, recalling that inflation had peaked at 38% last year.