ISLAMABAD: Pakistan’s Finance Ministry expects inflation to slow down significantly in May 2025, falling between 1.5% and 2% year-on-year, according to its latest monthly economic outlook report released on Thursday. This trend shows a sharp decline from last year’s double-digit inflation and reflects improving price stability in the country.

The report comes after April’s Consumer Price Index (CPI) inflation dropped to just 0.3%, compared to 0.7% in March. This consistent easing is largely due to a strong rupee, stable fuel prices, improved supply of essential items, and better food availability, especially wheat and vegetables.

Looking ahead, the ministry warned that inflation is expected to inch up in June, with forecasts ranging from 3% to 4%, mainly because the base effect is fading and seasonal demand may increase prices slightly. Still, the overall inflation outlook remains under control compared to the highs of 2023 and early 2024.

Meanwhile, JS Global, a leading brokerage house, projected May’s inflation at 2.7%, slightly above the ministry’s estimate. According to the firm, the average inflation for the first 11 months of FY25 will likely be around 4.7%, a significant drop from 24.9% in the same period of FY24, highlighting the impact of tighter monetary policies and better fiscal discipline.

The State Bank of Pakistan also expects annual inflation for FY2025 to stay between 5.5% and 7.5%, suggesting that the country’s economic fundamentals are stabilizing. Strong growth in exports and remittances, as noted in the ministry’s report, is also helping to keep the current account deficit within a safe range, further supporting overall macroeconomic recovery.