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Pakistan inflation eases to historic low in April

Inflation clocks in at 0.3%, mainly due to lower food prices

Pakistan inflation eases to historic low in April
A shopkeeper at his shop in Karachi's Kharadar
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Pakistan inflation clocked in at 0.3% in April, a historic low, according to data released by the Pakistan Bureau of Statistics on Friday.

Last month, inflation was recorded at 0.7%. Meanwhile, it was 17.3% in April 2024.

Among the commodities that recorded the sharpest year-on-year declines in April this year, onions led the pack with a dramatic 74.7% drop in prices, followed by tomatoes, which plunged 58.2%. Wheat and wheat flour saw substantial decreases of 36.0% and 34.6%, respectively.

Electricity charges dropped 26.6%, tea by 17.1%, wheat products by 14.8%, and potatoes by 14.1%.

Additionally, prices for pulse masoor fell 12.3%, eggs by 10.8%.

Based on the sharp decline in inflation to 0.3% year-on-year in April, well below the policy rate of 12%, market expectations are now tilting toward a rate cut in the coming monetary policy meeting on May 5.

With headline inflation nearly flat and core inflation also easing (at 7.4% YoY), economists argue that the current real interest rate is excessively high, potentially stifling investment and consumption. This strengthens the case for the State Bank of Pakistan (SBP) to remove a pause from the monetary easing cycle to support economic growth.

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