Pakistan's weekly inflation up as chicken and potato prices surge

Pakistan's inflation rate saw a slight increase of 0.20% for the week ending April 3, driven by rising prices of essential food items.

The prices of several essential commodities saw an increase, with chicken rising by 7.17%, potatoes by 6.50%, onions by 5.10%, beef by 0.52%, fresh milk by 0.25%, firewood and mutton by 0.12%.

Meanwhile, some items experienced a decline, including garlic (down 6.11%), bananas (5.34%), eggs (4.79%), LPG (0.70%), petrol (0.33%), and wheat flour (0.20%).

The Sensitive Price Indicator (SPI) showed a year-on-year decrease of 1.99% compared to the same week last year.

March 2025's Consumer Price Index (CPI) recorded a historic low of 0.7%, the lowest since 1965. Food inflation experienced a significant decline of 5.12% year-on-year, a sharp contrast to the hyperinflation phase of fiscal years 2023 and 2024, which saw rates of 39% and 22%, respectively.

Core inflation, excluding food and energy items, remained steady at an average of 10% over the past nine months. Urban core inflation was reported at 8.2%, while rural core inflation stood at 10.2%.

Analysts anticipate that the Prime Minister's recent announcement of an 18% reduction in electricity prices will further contribute to lowering overall inflation.

An analyst at JS Global said despite the 1,000 basis points cumulative cut in policy rate announced over the last nine months, the persistent disinflation keeps real interest rate levels elevated at around 11.3% following March CPI.

“The SBP did not cut interest rates in the last MPC meeting but based on the lower-than-expected inflation readings thus far, we may see a cut in rates going forward.”