WEB DESK: Pakistan’s inflation clocked in at 2.4 per cent in January 2025, according to data released by the Pakistan Bureau of Statistics (PBS). This is the lowest monthly inflation recorded for Pakistan in nine years.
In December 2024, monthly inflation was recorded at 4.1 per cent, which was drastically down from 28.3 per cent recorded in January 2024. In May last year, inflation in Pakistan reached the highest recorded of 38 per cent.
The seven-monthly average inflation is 6.6 per cent, notably lower than 28.7 per cent clocked for seven months of fiscal year 2024.
The decline in inflation is not as much a reflection of the real prices of consumer basket goods. Rather, the difference is more pronounced primarily because of the high base number. However, the overall increase of prices of goods in the consumer price index (CPI) was lower estimated.
The inflation is also impacted by the recent decrease in the interest rates by the State Bank of Pakistan (SBP), as announced by the recent meetings of the Monetary Policy Committee (MPC). The latest decline to 12 per cent, is the sixth successive cut in the interest rate by the central bank since the beginning of the current fiscal year. In June 2024 the interest rate was at 22 per cent and the SBP delayed the sharp decline to avoid pushing inflation into overdrive.
PSX & PKR
In addition to improving inflation, the local currency and the bourse have been showing signs of improvement as well. The Pakistan Stock Exchange (PSX) reached record highs, multiple times towards the end of the last calendar year.
Market analysts are expecting that the capital market will grow further, reaching in the ballpark of 125,000 points by the end of the calendar year 2025.
Similarly, the Pakistani Rupee is improving in parity as compared to the US Dollar and other major currencies. While the markets continue to fluctuate, the improving IT exports, and remittances to Pakistan, have led notable strength to the local rupee.