KARACHI: Inflation is expected to remain within the 1-1.5% range in Pakistan during the month of March, the country’s Finance Division said in its monthly outlook report on Tuesday, as Islamabad navigates a tricky path to recovery from a macroeconomic crisis.
Aggressive policy rate cuts by Pakistan’s central bank and a series of economic reforms by the government has led to a substantial decline in Pakistan’s annual inflation rate, bringing it down to 1.5% in February 2025.
Pakistan’s inflation rate peaked to a record high of 38% in May 2023 on account of surging food and fuel costs as Islamabad withdrew energy and fuel subsidies under a deal agreed with the International Monetary Fund (IMF) for a financial bailout package.
“Inflation is anticipated to remain within the range of 1.0-1.5% for March 2025 and inching up to 2.0-3.0% in April 2025,” the Finance Division said in the outlook report.
It added that high frequency indicators, such as a “positive” growth in cement sales, increased automobile production and higher imports with an easy monetary policy, suggest a potential uptick in production if demand conditions remain supportive.
The report highlighted that Pakistan may record a likely increase in foreign remittances due to “seasonal factors” such as the holy month of Ramadan and the upcoming Eid festivals.
“Similarly, exports and imports are expected to improve owing to the expansion in economic activity,” the report said. “Collectively, these factors will help to keep the current account within manageable limits.”
The report praised the government’s resource mobilization, saying it had led to an increase in tax collection during the month and also noted the “favorable” performance of the Pakistan Stock Exchange compared to major global indices.
Pakistan’s government has claimed the country is finally on the path to sustainable economic growth, vowing to undertake long-term financial reforms. The nation expects its foreign exchange reserves to increase beyond $13 billion by June despite weak net financial inflows caused by a shortfall in the planned official inflows.
Pakistan has also repaid the majority of its external debt due this year, according to the central bank.
