Pakistan inflation expected to drop further to below 0.5% in April 2025, says brokerage house
Inflation in the country stood at 59-year low of 0.7% on a year-on-year (YoY) basis in March 2025, a reading below that of February 2025 when it stood at 1.5%, showed Pakistan Bureau of Statistics (PBS) data.
'Pakistan's Consumer Price Index (CPI) for Apr 2025 is expected to bottom out and clock in below 0.50% YoY. The inflation is expected to remain in range of 0.05% to 0.5% YoY (-0.8% MoM,) taking 10MFY25 average to 4.87% compared to 26.22% in 10MFY24,' Topline said.
'The inflation is expected to be lower due to significant fall in food and electricity prices.'
It may be noted that inflation reading in Pakistan rose to a record 38% on a year-on-year basis in May 2023, the highest level since data was made available beginning July 1965.
During Apr 2025, as per the report, food inflation is expected to decrease by 3.32% month-on-month (MoM) mainly on the 25% decrease in fresh fruit prices, 21% decrease in tomatoes and onion prices and 19% decrease in prices of eggs. While prices of milk, meat, spices and pulses are expected to rise by merely 0.2% on average.
Housing, water, electricity and gas segment is expected to witness approx. a fall of 0.02% MoM due to decrease in electricity by 6.8%, and 0.5% decrease in solid fuel (wood) prices.
'However, this negative impact is likely to offset by 1.8% increase in rent. We have assumed fuel cost adjustment of negative Rs1.36/Kwh, Quarterly Tariff Adjustment (QTA) of negative Rs1.9, and PDL [Petroleum Development Levy] led incentive of negative Rs1.71.'
Transport segment is expected to also witness a fall of 0.12% MoM on the back of a 0.4% fall in fuel prices.
'We have arrived at our inflation estimates using avg. of SPI data of week ending Apr 10 and 17 (as cut-off is 11-14 of month). However, with SPI [Sensitive Price Indicator] reading of only Apr 17, 2025, the CPI reading turns negative, showing deflationary trend, falling in range of -0.25% to 0.25% YoY,' Topline said.
For FY25, the brokerage house revised down its inflation forecast from 5-6% to 4.5-5.5% 'owing to falling electricity prices, oil prices and food prices'.
'We will issue more details on this and on other indicators in our quarterly economy report, to be released in end Apr 2025,' the report said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
an hour ago
- Express Tribune
Tobacco sector: potential & illicit trade challenges
Listen to article Pakistan's tobacco industry plays a pivotal role in the nation's economy, providing employment opportunities, generating substantial tax revenue and supporting the agricultural sector. However, it faces growing challenges, including stringent regulations and the pervasive issue of cigarette smuggling, which undermines legitimate businesses and erodes government revenue. According to data from the Pakistan Bureau of Statistics (PBS) and industry reports, Pakistan's tobacco industry is valued at approximately $2.3 billion as of 2024, with a projected compound annual growth rate (CAGR) of 6.28% from 2025 to 2029. The cigarette segment dominates the market, with an estimated worth of $1.9 billion in 2025. Despite its economic significance, the industry has witnessed a decline in legal cigarette sales, which fell 8.3% in 2024, from 36 billion to 33 billion sticks, according to statistics from the Federal Board of Revenue (FBR). The tobacco sector remains a vital source of revenue, contributing Rs150 billion ($540 million) in taxes during fiscal year 2023-24, as reported by the FBR. This contribution includes federal excise duty (FED), sales tax and other levies, which help fund various government initiatives. Tobacco farming continues to be a critical activity, particularly in Khyber-Pakhtunkhwa and Punjab, where smallholder farmers benefit from higher per-acre returns compared to traditional crops like wheat or maize. Pakistan has implemented stringent anti-smoking policies in line with World Health Organisation (WHO) guidelines. These measures include higher taxes, graphical health warnings on packaging and bans on public smoking. In 2022-23, the FED on cigarettes saw a significant increase, raising the FED share in retail prices to 48% for low-tier brands and 68% for high-tier brands, according to the FBR. While these measures aim to reduce smoking rates, they have, on the contrary, fueled the illicit cigarette trade, which accounted for 46 billion out of 79 billion cigarettes sold in 2024, as per an Oxford Economics study. The illicit trade poses a significant threat to Pakistan's tobacco industry and the broader economy. Over the past decade, the country has lost over Rs567 billion in revenue due to smuggling and illegal manufacturing, as estimated by the FBR. In 2024 alone, legal cigarette sales dropped 8.3%, while the illicit market expanded. The availability of 74 smuggled cigarette brands across the country, as reported by the FBR, reflects inadequate enforcement measures. Many of these smuggled brands evade high taxation, which makes them cheaper and more accessible, thereby exacerbating public health risks. Pakistan's tobacco industry operates within a regional context that includes India, Bangladesh and Iran, each of which faces similar regulatory and economic challenges. India's tobacco industry is one of the largest in the world, valued at $11 billion in 2024, according to the India Brand Equity Foundation, with a projected CAGR of 4.5% from 2025 to 2029. Cigarette sales in India are under pressure due to high taxes and stringent regulations, including an 85% graphical health warning mandate. Despite contributing over $7 billion in annual tax revenue, India's illicit cigarette trade accounts for nearly 25% of the market, reported the Euromonitor International. Bangladesh's tobacco industry is valued at $1.8 billion, with a projected CAGR of 5.2%, said the Bangladesh Bureau of Statistics. The sector contributes $1.2 billion in taxes and employs thousands of farmers, particularly in Rangpur and Chittagong regions. Regulatory measures, including tax hikes and smoking bans, have led to illicit trade accounting for 20% of sales, showed WHO statistics. Smuggled products primarily enter the country from India and Myanmar, facilitated by weak border enforcement. Iran's tobacco industry, valued at $1.2 billion, is heavily regulated, with a projected CAGR of 3.8%, according to the Iranian Customs Authority. Despite contributing $800 million in taxes, strict regulatory measures have caused legal sales to decline, fueling the growth of illicit trade. Smuggling, primarily from Afghanistan and Iraq, makes up 30% of the market. All four countries — Pakistan, India, Bangladesh and Iran — struggle with the issue of smuggled cigarettes, which harm legitimate businesses and reduce government revenues. Pakistan's illicit trade share, at 58%, is the highest in the region, underscoring the urgent need for stronger enforcement measures. Pakistan's high taxation and graphical health warnings have disproportionately impacted legal sales compared to its regional counterparts. Finding a balance between public health objectives and economic interests remains a critical challenge. Despite these challenges, Pakistan's projected CAGR of 6.28% is the highest in the region, suggesting significant potential for expansion if the issue of illicit trade is addressed effectively. Enhanced regional cooperation, particularly with India and Bangladesh, could help curb cross-border smuggling. Sharing best practices in enforcement, digital tracking systems and policy frameworks could prove mutually beneficial. Pakistan's tobacco industry should also explore opportunities in reduced-risk products, such as e-cigarettes and heated tobacco, to align with global trends. Supporting farmers in transitioning to alternative crops could help mitigate the risks associated with regulatory pressures. In conclusion, while Pakistan's tobacco industry remains a key economic contributor, it faces significant challenges from regulatory pressures and illicit trade. Proactive measures by industry stakeholders and the government, coupled with regional collaboration, will be essential to navigate these challenges and secure a sustainable future for the sector. The writer is a Mechanical Engineer and is pursuing Master's degree
Business Recorder
2 hours ago
- Business Recorder
Energy and veggies spike CPI
The 4.07 percent year-on-year increase in CPI inflation took a few by surprise. It should not energy price changed, if done correctly, were always going to have the biggest impact on CPI for July 2025. Many missed the finer points of natural gas price revisions effective July 1, 2025 – where the headlines were made around no changes in base rates. BR Research had kept a close eye on the development and the PBS, did not blink this time and seems to have accounted for the subtle changes in effective domestic gas tariffs. Recall that the government had notified increased fixed rate for both protected and non-protected consumption slabs, in addition to significant increase in minimum charges. Given protected consumers are at least 60 percent of all domestic gas consumers – the CPI impact on urban class was going to be substantial. The previous weekly SPI reading for the bottom quintile also shows a 30 percent increase – which sounds about right. Well done to the PBS for not missing it! The 23 percent increase in gas prices takes the cake in month-on-month urban CPI increase of 3.45 percent- contributing 41 percent to the month-on-month increase. This is also the highest month-on-month increase since November 2023. Guess what happened in November 2023? Yes, the gas prices went up by a small matter of 280 percent in a go. Electricity price increase was another major contributorwith a month-on-month jump of 14 percent – highest in 19 months. This is despite the base tariffs revised down in July 2025. The increase reflects surprising abolishment of Rs1.71/unit subsidy, announced in April 2025. The communication with IMF stated the subsidy will last the entire FY26, but it was not the case. That said, month-on month changes for at least the next quarter should be limited – given a sizeable negative periodic adjustment on the way. On the rural front, the 2.15 percent month-on-month change is the highest since July last year. It is the food basket that makes the biggest difference, with 3 percent increase. The charge is led by 'fresh vegetables' with the highest-ever ever month-on-month reported increase of 56 percent. The category contributes a stellar 40 percent to urban month-on-month CPI PBS tracks no less than 15 vegetables in the category. Only the price of garlic is published in the weekly SPI – and the monthly increase of 14 percent there suggests the more substantial increase would have come from any of the ladyfinger, spinach, carrots or lemons. The core reason why rural price change is lower than that in urban settings is largely because rural basket does not account for natural gas, and instead has firewood, where the rate of change is rather small. In weighted contribution terms, non-food contributes over 90 percent in both urban and rural settings. In the food basket, barring extreme events, month-on-month price change should normalize going forward, given it is led largely by perishable items – primarily vegetables with over 4 percent weight in rural and 3 percent in urban baskets. Core inflation, though, remains sticky - refusing to budge down, again clocking 7 percent year-on-year for urban and 8.1 percent for rural. For general inflation in FY26, it is too early to make year-end calls, but if FY26 ends up anywhere near the central bank's 5-7 target – it will be the first time since at least the CPI rebasing, for annual inflation to stay in single digits, with a month-on-month reading in excess of 2.5 percent. Copyright Business Recorder, 2025
Express Tribune
2 days ago
- Express Tribune
Gas, sugar and footwear drive annual SPI higher
Listen to article The Sensitive Price Indicator (SPI) recorded a year-on-year (YoY) increase of 1.98% for the week ended July 31, 2025, reflecting mixed trends across essential commodities. Notable price hikes were seen in gas, sugar, pulses, beef and vegetable ghee, while non-food items like ladies' sandals registered the biggest increase of 55.62%. On a YoY basis, gas charges for the first quarter rose 29.85%, sugar 21.66%, pulse moong 14.27%, beef 14.16%, 2.5kg vegetable ghee 12.33%, 1kg vegetable ghee 11.95%, firewood 11.75%, gur 11.23%, eggs (10.94%), cooked beef (9.31%) and printed lawn (7.32%). In contrast, a major YoY decrease was observed in prices of onions (-49.32%), tomatoes (-42.31%), garlic (-23.78%), wheat flour (-22.90%), pulse mash (-21.40%), Lipton tea (-17.93%), potatoes (-15.95%), chicken (-11.71%), electricity charges for Q1 (-10.02%) and liquefied petroleum gas (LPG, -0.86%). The data, compiled from 50 markets across 17 cities, indicates continued volatility in food prices, though the headline weekly inflation showed some moderation due to seasonal and market-driven factors. The week-on-week inflation, measured through the SPI, fell 0.35% for the week ended July 31, 2025, according to the Pakistan Bureau of Statistics (PBS). The decline was mainly driven by a significant drop in prices of perishable and essential food items, including tomatoes (-17.26%), chicken (-4.76%), bananas (-2.97%) and moong pulse (-1.55%). Prices of LPG (-1.39%) and wheat flour (-0.59%) also declined. Out of the 51 essential items tracked, prices of 12 items fell, 11 items recorded an increase and 28 items remained unchanged. Notable increases were seen in eggs (+1.80%), firewood (+1.11%) and cooked beef (+1.08%). The weekly SPI declined across all income groups, with the lowest quintiles (Q1 and Q2) seeing the biggest drop of 0.42%. However, on a YoY basis, lower- and middle-income groups faced higher inflation, with Q2 showing the largest annual increase of 2.80%, while the highest-income group (Q5) saw a smaller rise of 1.23%. The overall annual SPI rose 1.98%, reflecting continued pressure from rising prices of essentials like sugar, gas and pulses. Meanwhile, the monthly Consumer Price Index (CPI) recorded a YoY increase of 4.1% in July 2025, according to data released by the PBS and IIS Research. This marks a rise from the 3.2% growth recorded in June 2025 and a significant decline from the 11.1% inflation in July 2024. Key contributors to the CPI increase include a 0.89% rise in food and non-alcoholic beverages and a 3.56% increase in clothing and footwear. Housing and household furnishings saw a 3.56% uptick, while transport costs rose 2.72%. On a month-on-month basis, the CPI rose 2.92%. PBS data highlights a varied impact across sectors, with education, recreation and culture showing a moderate growth, while miscellaneous items surged 14.89% YoY. The overall headline CPI for July 2025 stood at 271.9 points, up from 261.3 in June.
