Inflation in Pakistan Shows Signs of Easing

Pakistan's consumer price index (CPI) for February rose by 23.1% compared to the same month last year, marking the slowest annual inflation rate since June 2022, according to data from the Pakistan Bureau of Statistics.

The country has been grappling with soaring inflation, which peaked at an all-time high of 38% in May last year, partly due to new taxation measures imposed by the government to meet International Monetary Fund (IMF) requirements. The IMF funding agreement with Pakistan is set to expire on April 11.

On a month-on-month basis, the February CPI remained unchanged, breaking a streak of monthly increases since the start of the fiscal year in July. The finance ministry projected in a recent report that inflation would hover around 24.5%-25.5% in February, with expectations of further easing to 23.5%-24.5% in March as crop conditions and commodity supply improve.

The annual CPI for January was 28.3%, and February's improvement was partly due to base effects. The State Bank of Pakistan held its benchmark interest rate at 22% for the fifth consecutive policy-setting meeting and raised its full-year inflation projections. The central bank's governor attributed the increase in the average inflation forecast for the fiscal year to rising gas and electricity prices.