Finance Ministry: Inflation could drop to 23.5-24.5 percent in March

The Ministry of Finance has projected that, starting this month, inflation will gradually reduce, mostly as a result of a decline in the cost of perishable goods.

The ministry stated in its Monthly Economic Update and Outlook for February that inflation is expected to remain in the range of 24.5-25.5 percent in February and then ease even more to 23.5-24.5 percent in March.

“The inflation outlook for the upcoming month may have a downward trend, primarily due to a decrease in the prices of perishable items on the back of better crops and ease in supplies,” it stated, “despite the upward adjustment in transportation expenses and gas prices.”

The paper went on to say that the high base effect would help to maintain modest inflationary pressure.

The Food and Agriculture Organization’s food price index, which measures the most widely traded food items worldwide, was reported to have decreased by 1.0 percent from December 2024 to an average of 118.0 points in January 2024.

This revelation coincides with Pakistan’s implementation of changes related to a $3 billion Standby Arrangement with the International Monetary Fund (IMF), and one day before the Pakistan Bureau of Statistics (PBS) is scheduled to issue the inflation data for this month.

It is important to remember that the January annual Consumer Price Index was 28.3 percent, the final monthly figure before the general elections on February 8.

For the fifth consecutive policy meeting, the State Bank of Pakistan maintained the benchmark rate at 22 percent in January and raised its estimates for inflation for the entire year.

The SBP claimed that the move was justified because of December’s “elevated” inflation rate of 29.7 percent.

He had previously stated that rising gas and electricity prices were the reason behind the bank’s revised average inflation forecast for the fiscal year ending in June, which was raised from 20 to 25 percent.