Pakistan's weekly inflation rate decreased for the fourth consecutive week, dropping by 0.77% for the period ending January 23, 2025.
The Sensitive Price Indicator (SPI), which tracks the price movement of essential commodities, reported significant decreases in the prices of tomatoes (32.99%), eggs (10.23%), onions (9.79%), potatoes (7.37%), LPG (2.70%), pulse gram (1.61%), chicken (1.00%), pulse mash (0.76%), and gur (0.50%).
Conversely, the SPI noted increases in the prices of sugar (2.93%), bananas (2.70%), garlic (0.60%), rice basmati broken (0.47%), vegetable ghee 1 kg (0.33%), pulse moong (0.25%), cooked daal (0.21%), rice IRRI-6/9 (0.15%), and firewood (0.13%).
On a yearly basis, short-term inflation for the week ended January 23rd clocked in at 0.5%, the lowest in seven years.
Analysts say the sharp decline in inflation, which eased to 4.1% in December 2024 (the lowest in 80 months), is expected to further decrease to 2.8% in January 2025.
In the first half of the fiscal year 2025 (1HFY25), the current account surplus increased to $1.2 billion, reversing the deficit of $1.397 billion seen in the same period last year.
Remittances surged by 33% year-on-year in 1HFY25, reaching $17.8 billion, providing critical support to the external sector.
The policy rate cut is expected to reduce production costs for industries, stimulating demand that has been suppressed by high costs. This comes after a 1.3% decline in large-scale manufacturing (LSM) growth for the first five months of FY25.
Additionally, the State Bank of Pakistan's (SBP) reserves increased to $11.7 billion in January 2025, up from $9.4 billion in June 2024.
This rise was supported by the International Monetary Fund's (IMF) first tranche of $1 billion from the 37-month Extended Fund Facility (EFF) received during the first seven months of FY25, along with inflows from institutions like the Asian Development Bank (ADB) and SBP buying from the open market.
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