Pakistan’s headline inflation reached a record low of 0.7% in March 2025, down from 1.5% in February. This marks the lowest inflation rate since December 1965, according to Pakistan Bureau of Statistics (PBS) data. On a month-on-month basis, inflation increased by 0.9%, reversing the 0.8% drop seen in February. This dip in inflation is a significant improvement compared to the 1.7% rise in March 2024.
The average inflation rate for the first nine months of FY25 stood at 5.25%, a sharp drop from the 27.06% recorded in the same period last year. Inflation had been a persistent problem in Pakistan, reaching an all-time high of 38% in May 2023. However, the country has seen a steady decline in inflation since then, giving some relief to the economy.
The Finance Division had predicted inflation to remain between 1-1.5% in March, with an increase expected in April. The Monetary Policy Committee (MPC) kept the policy rate at 12% in its latest meeting, citing a decrease in food and energy prices. While inflation has fallen, core inflation remains high, and any rise in food or energy costs could push inflation back up.
Inflation data varied across urban and rural areas. Urban inflation decreased to 1.2% in March, down from 1.8% in February. In contrast, rural inflation remained steady at 1.1% compared to the previous month. On a month-to-month basis, rural inflation rose by 1.1%, while urban inflation increased by 0.8%. These trends reflect diverse inflationary pressures across different regions of Pakistan.