Pakistan’s economic outlook continues to improve as inflation and interest rates are forecast to fall significantly in the coming months, according to a report by Topline Research.
The report suggests that the annual inflation rate for January 2025 is projected to range between 2.5% and 3%, marking the lowest inflation rate in nine years. The average inflation rate for the first seven months of the current financial year is likely to stand at 6.66%, a stark contrast to the 28.73% recorded during the same period last year.
Topline Research anticipates that the State Bank of Pakistan (SBP) will lower the policy interest rate by 100 basis points, bringing it down from 13% to 12%. The Monetary Policy Committee of the SBP is scheduled to meet on January 27 to discuss the possibility of further reducing the base interest rate. The interest rate is forecast to stay between 11% and 12% by the end of 2025.
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The International Monetary Fund (IMF) has estimated average inflation for the current financial year to be around 9.5%, lower than the Federal Bureau of Statistics' earlier projection of 12.7%. However, global factors such as fluctuations in oil prices and commodity rates may still influence inflation trends in Pakistan.
Weekly inflation decreases
Meanwhile, the Federal Bureau of Statistics reported a weekly decline in inflation, with the rate dropping by 39% week-on-week. It reported that the inflation rate further reduced to 1.16%.
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While the prices of 21 items, including bananas, tomatoes, and firewood, increased, 10 essential commodities like potatoes, onions, live chicken, and LPG saw significant price reductions. The prices of 20 items, including rice, fresh milk, and bread, remained stable during the same period.
- Increased prices: Bananas rose by Rs3.89 per dozen, a 2.5kg tin of ghee by more than Rs16, firewood by Rs13.14 per maund. Petroleum products, sugar, pulses, jaggery are also among the items getting expensive.
- Decreased Prices: Tomatoes by Rs27.75 per kg, potatoes fell by Rs9.97 per kg, onions by Rs13.44 per kg, and live chicken by Rs9.87 per kg. Other items such as LPG, garlic, eggs, and daal maash also became cheaper.
