Pakistan witnessed a significant downturn in headline inflation as it dipped to 20.7 per cent year-on-year in March, according to the latest data released by the Pakistan Bureau of Statistics (PBS) on Monday.

This marks a notable decline from February’s figure of 23.1 per cent. Additionally, on a month-on-month basis, inflation rose by 1.7 per cent.

Notably, this is the lowest inflation reading since May 2022, when it stood at 13.8 per cent, as reported by JS Global.


It also signifies a remarkable milestone, being the first time in over three years that the Consumer Price Index (CPI)-based inflation figure has fallen below the crucial policy rate, which presently sits at 22 per cent.

The July-March average inflation now stands at 27.22 per cent, slightly higher than the same period last year at 27.19 per cent.

The inflation figure, coming in lower than the government’s projections, adds weight to the anticipation of a reduction in the key interest rate.

In its ‘Monthly Economic Update and Outlook’ report released on Friday, the Ministry of Finance forecasted CPI-based inflation to range between 22.5-23.5 per cent for March 2024.

Despite the recent upward revision of petrol prices and the onset of Ramadan, inflation in March has been perceived at a moderate level, according to the ministry.

The government’s announcement of a relief package for Ramadan, with an increased allocation from Rs7.5 billion to Rs12.5 billion, is expected to mitigate the impact of heightened demand during the religious festival.

Moreover, the moderation of inflationary pressures is attributed partially to the phenomenon of the high base effect, as highlighted in the outlook report.

Global factors have also played a role in shaping inflation dynamics, as noted by brokerage house Arif Habib Limited (AHL). AHL’s report predicts a further decline in inflation, estimating a year-on-year headline inflation rate of 20.2 per cent for March 2024.

Similarly, IGI Securities projects the national CPI to grow at a year-on-year rate of 20.3 per cent, with a monthly growth of +1.4 per cent compared to February 2024.

Despite the government’s recent increase in gasoline prices, experts anticipate inflation to remain below 20 per cent in the upcoming months, primarily due to the high base effect.

This development fuels speculation regarding potential monetary policy adjustments in the near future.