Inflation drops to 16-month low

Pakistan’s inflation rate sharply dipped to 23.1% last month – the slowest pace in the past 16 months – due to a steep reduction in food inflation coupled with a high base effect, creating room for an interest rate cut by the central bank.

The 23.1% inflation rate for February was even lower than both market and government expectations. A day earlier, the Ministry of Finance had projected a range of 24.5% to 25.5% for February’s reading.

There has been a marked slowdown in food inflation, non-food inflation, and core inflation indicators, underscoring that the overall faster pace may now start to slow down.

The Pakistan Bureau of Statistics reported on Friday that the inflation rate eased to 23.1%, marking the slowest pace since November 2022 when the reading was 23.8%. The slowdown was observed across urban and rural areas, with rates easing to 24.9% in cities and 20.5% in rural areas.