Key points
- Pakistan witnessed 4.1pc inflation rate in December 2024
- Inflation stood at 4.9pc in November 2024
- SBP decided to cut policy rate by 200bps to 13pc in December
ISLAMABAD: The downward trajectory of Consumer Price Index (CPI)-based inflation is expected to continue in Pakistan, with projections hinting it could decline below three per cent in January, said market experts.
A leading Pakistani financial newspaper cited a report of JS Global as saying “the current sharp disinflation trend is likely to persist, with Jan-2025 CPI likely to decline to 2.8 per cent (lowest since Nov-2015 owing to a high base affect), despite 0.6 per cent MoM uptick.”
“This would take 7MFY25 average inflation to 6.7 per cent, down from 7MFY24 average of 28.7 per cent,” the report added.
The same reading was shared by another brokerage house, Ismail Iqbal Securities Limited, in its latest report, according to Business Recorder.
“Inflation for Jan’25 is projected at 2.9 per cent, sharply down from 28.3 per cent the same period last year, reflecting a significant easing in price pressures,” said the brokerage house.
Key policy rate
In December 2024, Pakistan’s headline inflation clocked in at 4.1 per cent on a year-on-year basis, a reading below that of November 2024 when it stood at 4.9 per cent, showed Pakistan Bureau of Statistics (PBS) data.
The brokerage houses also noted that the consistent decrease in inflation readings gives impetus to the central bank for a further cut in the key policy rate.
“In our view, the persistent drop in inflation, settling at higher single digits from May 2025, strengthens the Monetary Policy Committee’s (MPC) case for continuing the easing cycle,” said JS Global, which expected another decrease this month, although a relatively smaller reduction of 100 basis points (bps,) compared to the sharp cuts so far.
Last month, the MPC of the SBP took the decision to cut the policy rate by 200 bps to 13 per cent. Cumulatively, the policy rate decreased by 900 bps since June during the last five consecutive monetary policy decisions.