Islamabad, March 3, 2025 – Pakistan has reported a significant decrease in headline inflation, as measured by the Consumer Price Index (CPI), which dropped to 1.5% on a year-on-year (YoY) basis in February 2025. This marks a notable reduction from 2.4% in the previous month and a substantial drop from the 23.1% recorded in February 2024. The decline in inflation indicates a gradual easing of price pressures across the economy and reflects improving economic stability.
On a month-on-month (MoM) basis, headline inflation decreased by 0.8% in February 2025, contrasting with a slight increase of 0.2% in January 2025. A similar trend was observed in February 2024, where inflation remained unchanged. The reduction in month-on-month inflation points to a temporary reprieve from inflationary pressures, potentially driven by stabilizing fuel prices and better control over food costs, which have been major contributors to inflation in recent years.
The latest data also reveals a positive shift in inflation trends across urban and rural areas. Urban CPI-based inflation declined to 1.8% YoY in February 2025, down from 2.7% in January and a sharp 24.9% in February 2024. On a MoM basis, urban inflation fell by 0.7% in February 2025, compared to a 0.2% increase in the prior month and February 2024. Rural inflation also experienced a decline, dropping to 1.1% YoY in February 2025 from 1.9% in January and 20.5% in the same month of the previous year. Rural areas saw a more significant MoM reduction of 1.1% in February 2025, contrasting with a modest 0.2% increase in January 2025 and a 0.3% decrease in February 2024.
Inflation indicators such as the Sensitive Price Index (SPI) and Wholesale Price Index (WPI) also showed a positive trend. The SPI inflation dropped to 0.2% YoY in February 2025, down from 0.7% in January and a much higher 30.4% in February 2024. On a MoM basis, SPI inflation decreased by 1.6% in February 2025, following a 1.4% decline in the prior month and a 0.8% decrease in February 2024. Meanwhile, WPI inflation fell to 0.7% YoY in February 2025, a slight increase from 0.6% in January, but a significant drop from 18.7% in February 2024.
Core inflation, which excludes food and energy prices, also demonstrated a downward trend. Non-food, non-energy (NFNE) inflation in urban areas remained stable at 7.8% YoY in February 2025, unchanged from the previous month but significantly lower than 15.5% in February 2024. In rural areas, core inflation stood at 10.4% YoY, consistent with January but down from 21.9% in February 2024. The 20% weighted trimmed mean inflation, which serves as a more refined inflation measure, declined to 4.6% YoY in urban areas and 5.2% YoY in rural regions.
The overall decline in headline inflation reflects the government’s ongoing efforts to control price hikes and stabilize the economy. The reduction in both urban and rural inflation, along with a decrease in core inflation and key price indices, suggests that Pakistan is gradually achieving success in its economic stabilization measures. This drop in inflation is a positive sign for the country’s economic outlook, and experts expect that continued efforts in managing inflation could contribute to sustained economic stability in the coming months.