Pakistan economy achieves Disinflation
By Dr Ashraf Chohan
Chairman PMLN UK
Chief Editor Daily Rapid
Pakistan economic landscape in early 2025 presents a complex mix of progress and persistent challenges. The most striking recent development is the sharp decline in Consumer Price Index (CPI) inflation, which dropped to 1.51% year-on-year (YoY) in February 2025 the lowest in nine years. Analysts describe this as disinflation, where inflation slows significantly but does not turn into outright deflation. According to Topline Securities, this is the lowest reading in 113 months, while Arif Habib Limited noted it as the lowest since September 2015.
The Pakistan Bureau of Statistics (PBS) reported that CPI inflation in February rose just 1.5% month-on-month (MoM), compared to 2.4% in January. This represents a dramatic shift from the 23.1% YoY inflation recorded in February 2024, signaling improved price stability. However, while the overall inflation rate has eased, price pressures remain in specific sectors. Urban areas experienced higher costs for pulses, dairy products, and medical expenses, whereas rural regions faced rising prices in education, food, and textiles.
This inflation slowdown can be attributed to several factors, including monetary tightening by the State Bank of Pakistan (SBP), improved supply chain conditions, and a relatively stable exchange rate. The central bank policies, combined with fiscal consolidation measures, appear to have helped in cooling down inflationary pressures. However, economic growth remains sluggish, with businesses and consumers still feeling the effects of previous high inflation, energy shortages, and global economic uncertainty.
Moving forward, key concerns for Pakistan economy include external debt obligations, revenue generation, and attracting investment. While lower inflation may provide some relief to households and businesses, the government will need to focus on boosting exports, stabilizing the rupee, and ensuring sustainable economic growth. The coming months will test whether this disinflation is a temporary phenomenon or a sign of lasting economic stability.
