Pakistan’s inflation likely to spike in April

Inflation in Pakistan is expected to rise in April 2025, in the range of 2% to 3%, compared to the last two months, while remittances are likely to show further improvement in the coming months, according to the Ministry of Finance’s monthly Economic Outlook released Tuesday.

Inflation is anticipated to remain within the range of 1.0%-1.5% in March 2025 but is projected to increase to 2.0%-3.0% in April.

On the external front, exports, imports, and workers’ remittances are expected to maintain their upward trend.

Remittances are likely to increase further due to seasonal factors, including Ramadan and Eid celebrations. Similarly, exports and imports are expected to improve as economic activity expands.

Collectively, these factors are expected to help keep the current account within manageable limits.

The government is supporting farmers with targeted initiatives to boost agricultural productivity. Favorable weather remains a key factor in ensuring better harvests, contributing to meeting production targets.

The recent month-on-month growth in large-scale manufacturing signals resilience. However, the year-on-year decline underscores underlying weaknesses that may continue to weigh on industrial performance.

High-frequency indicators—such as growth in cement sales, increased automobile production, and higher imports—combined with an easy monetary policy, suggest a potential uptick in production if demand conditions remain supportive.

Inflation was recorded at 1.5% on a year-on-year basis in February 2025, compared to 2.4% in January 2025 and 23.1% in February 2024. On a month-on-month basis, inflation decreased by 0.8% in February, following a 0.2% increase the previous month.

Major contributors to the year-on-year increase in the Consumer Price Index included health (14.3%), clothing and footwear (13.8%), education (10.9%), restaurants and hotels (7.6%), alcoholic beverages and tobacco (6.7%), furnishing and household equipment maintenance (4.5%), and communication (0.1%). Meanwhile, declines were observed in perishable food items (20.3%), non-perishable food items (1.5%), transport (1.1%), and housing, water, electricity, gas, and fuels (0.6%).

The Sensitive Price Index for the week ending March 20, 2025, recorded a 0.35% decrease compared to the previous week. During the week, prices of 18 items decreased, 22 items remained stable, and 11 items increased.