PM credits govt policies as inflation hits record low

Inflation continues to plummet in Pakistan, dropping to just 0.7 percent on a year-on-year (YoY) basis in March 2025. Data from the Pakistan Bureau of Statistics (PBS) suggests that inflation sits at its lowest level since 1965.

The Ministry of Finance (MoF) had not anticipated inflation to drop so liberally, as their projections pegged inflation to float between 1 to 1.5 percent during March. A reputable research organization has confirmed the PBS’ claim of inflation dropping to its lowest level in nearly six decades by utilizing data obtained from the State Bank of Pakistan (SBP).

According to Prime Minister Shehbaz Sharif, the drop in inflation highlights the government’s hard work to increase public welfare. He outlined how combating inflation was a key part of the manifesto and that controlling the sky-high inflation rates would positively impact the lives of citizens.

Reports contrast the current prices with those of the past, where prices declined by 0.8 percent in February and increased by 1.7 percent in March 2024. Analysts claim that the drop in inflation can be attributed to falling foodstuff prices.

Pakistan’s consumer price index (CPI) -based inflation rate has been witnessing diminishing growth because of a fall in the prices of goods like pulses, potatoes, wheat and onions. Prime Minister Shehbaz Sharif’s recent cut in power rates could allow for inflation rates to record an even steeper fall - but this change is likely to be witnessed towards the end of April 2025.

Experts have outlined that a large drop in CPI inflation figures can be noted when the prices of the aforementioned goods decline even marginally. This is because these goods hold great weight in inflation calculations as they make up a large chunk of the basket of goods that are consumed.

However, prices for some goods recorded increases owing to their high demand. For instance, the price of edible oil and sugar has been soaring locally even though their prices have fallen in the international market. 

Some claim that the government is responsible for the rise in sugar prices as Islamabad allowed the export of sugar. Although sugar was available in surplus at the time, the government eventually had to place an import order for the commodity given the increased level of demand because of Ramzan.

As per data from reports, inflation has largely been contained after it surged to 38 percent in May 2023. The SBP led the charge against soaring prices by raising interest rates to limit consumption and investment spending in the economy.  

The SBP has cut policy rates by 1,000 basis points over the past few months. However, inflation remains locked in its freefall. Many believe that inflation has not hit bottom yet and could record further drops in the coming months.