In its most recent report released on Thursday, the Finance Division predicted that Pakistan’s Consumer Price Index (CPI)-based inflation would remain stable in February but would probably increase little in March.

The “Monthly Economic Update and Outlook” for February 2025 predicts that inflation will stay between two and three percent in February and then slightly climb to three to four percent in March.

The seasonal spike in food prices during Ramadan is the reason for this surge.

Higher household spending on food, drinks, and other consumables at this time usually results in inflationary pressures, which analysts believe will help drive the expected increase in the inflation rate.

The research also emphasized that, with the help of a supportive monetary policy, inflationary pressures should decrease over the year. Despite the sector’s sluggish recovery, this trend is expected to promote a more stable financial climate, increasing company confidence and aiding in the recovery of large-scale manufacturing (LSM). Even while the LSM recovered more slowly, the report also pointed out that export-oriented industries kept expanding.

According to the Finance Division’s projection, the State Bank of Pakistan (SBP) was able to reduce its benchmark interest rate by 100 basis points to 12% in January due in large part to the decline in inflation. After a string of dramatic rate reduction over the previous six months with the goal of promoting growth and containing inflation, this cut was a component of the larger monetary easing cycle.

One of the biggest rate cuts among emerging economies occurred last year when the SBP cut its policy rate from a record high of 22% in June 2024. The goal of these reductions was to control inflation, which had risen to a record 38% in May 2023 but had since begun to decline. According to data from the Pakistan Bureau of Statistics (PBS), CPI-based inflation from January 2025 was 2.4% year-over-year, which was lower than the 4.1% rate in December 2024.

According to the Finance Division study, positive supply-side variables and low domestic demand reduced inflationary pressures. The financial climate has become more stable as a result of these factors and declining interest rates, allowing the SBP to continue its strategy of gradual rate reductions.

The research also highlighted encouraging trends in foreign direct investment (FDI) and remittances, which have improved economic optimism. It is anticipated that these elements, in addition to robust growth in imports and exports, will contain the current account deficit in the upcoming months.

According to a news release, a Tehran delegate informed a Pakistani parliamentary panel this week that Iranian vehicles stalled on the Pakistani border for the previous six months as a result of new customs regulations had suffered an estimated daily economic loss of $2.2 million.

Last year, Pakistan forced Iranian carriers to furnish a bank guarantee equal to the customs taxes and charges paid on products arriving at the National Logistics Corporation (NLC) Dry Port Quetta through the Iranian border crossing of Taftan. Islamabad is not required to provide Tehran with the same assurances.

The Senate Standing Committee on Finance said in a news release following its meeting that “the ongoing crisis at the Pakistan-Iran border, where over 600 trucks carrying trade goods have been stuck due to customs officials demanding court orders, was one of the most pressing issues discussed.”

Each truck carried supplies valued at about $11,000, according to the Iranian official at the meeting, and the delay was costing traders around $100 per truck every day, which ultimately increased the price of goods for consumers.

According to the statement, “an estimated daily economic loss of $2.2 million has resulted from the drop in the number of trucks crossing the border in the past six months.”

Prime Minister Shehbaz Sharif would now receive a letter from the senate committee asking him to bring up the issue at the upcoming cabinet meeting.

“This problem has escalated to a critical stage. It is an issue of honor for the country as well as financial losses. The issue is extremely worrisome for the entire nation,” committee chairman Saleem Mandiwalla stated.

Under the monthly fuel adjustment mechanism, K-Electric has formally requested a December electricity pricing cut of Rs4.95 per unit.

After careful consideration, the National Electric Power Regulatory Authority (NEPRA) has chosen to postpone making a decision. At a later time, the final decision will be shared.

K-Electric requested a rate reduction of Rs4.95 per unit during the hearing for its December fuel adjustment application. The utility firm also requested clearance for adjustments relating to arrears of Rs5 billion.

K-Electric clarified that startup expenses, open cycle, and partial load operations were the causes of these arrears. Consumers of K-Electric, however, strongly opposed the request, with some contending that the public should directly benefit from the fuel adjustment.

Concerns were also expressed regarding the continuous load shedding in Karachi’s business districts and the industrial support package’s non-implementation.

K-Electric has filed a lawsuit against the industrial support package, NEPRA officials noted.

According to K-Electric representatives, the price of power generated using the company’s own resources in December was Rs18.60 per unit, while the Central Power Purchasing Agency (CPPA) charged Rs9.60 per unit.

Although the hearing was adjourned, NEPRA has reserved its judgement, which will be rendered following a careful examination of the information and computations. In due time, a final decision and formal announcement will be made public.