ISLAMABAD: The rate of inflation in Pakistan is likely to remain between 1.5 to 2 percent in April, the government’s Finance Division said on Thursday in its monthly economic outlook, stating that the country’s macroeconomic indicators have shown “signs of overall stabilization.”

Pakistan’s economy has improved in recent months, supported by declining inflation which fell to 1.5 percent in February. The central bank has reduced its policy rate to 12 percent after a series of cuts totaling 1,000 basis points since June 2024.

In its outlook for the month of April, the Finance Division said inflation has reduced to its “lowest level,” creating space for a more supportive monetary policy in upcoming months.

“Inflation is projected to remain between 1.5-2.0 percent in April, with a possible rise to 3.0-4.0 percent by May 2025,” the report said. 

The report said that Consumer Price Index (CPI) inflation eased to 0.7 percent year-on-year in March 2025, down from 1.5 percent in February and 20.7 percent in March 2024. Month-on-month, it rose by 0.9 percent, following a 0.8 percent decline in February and a 1.7 percent increase in March 2024.

The monthly outlook report also noted that the current account registered a higher surplus, driven by remittances and export growth, while reserves improved and the exchange rate remained stable. 

“Revenue mobilization and restrained current spending have contributed to a narrower fiscal deficit and a surplus primary balance,” it said. 

The report also noted improvements in high-frequency indicators, such as rising automobile output, raw material imports and a more “accommodative monetary stance.”

“Improved weather conditions and increased water availability are likely to support higher crop yields and better farming conditions contributing to overall economic growth,” it said. 

The report also said exports and remittances are expected to maintain their upward trend in the coming months, keeping the current account within a “manageable range.”