Ministry projects inflation at 2-3% for February

February 27, 2025 (MLN): Inflation in February 2025 is anticipated to remain within the range of 2%-3%, however, there are prospects of a slight increase to 3%-4% by March 2025, according to the Monthly Economic Update & Outlook released by the Ministry of Finance. 

In January, CPI inflation was recorded at 2.4% YoY as compared to 4.1% in the previous month and 28.3% in January 2024. On MoM basis, it slightly increased by 0.2% in January 2025 compared to an increase of 0.1% in the previous month and an increase of 1.8% in January 2024.

The report also mentioned that the fiscal performance during H1- FY2025 is reflective of the government's effective consolidation measures, which resulted in better expenditure management and improved resource mobilization.

These measures are expected to contain the fiscal deficit at lower level than the previous year while ensuring fiscal discipline.

Similarly, with contained non-markup expenditures, the primary surplus is expected to improve further in the coming months, it added. 

On the external front, exports, imports, and workers' remittances are expected to maintain their upward trend.

In the coming months, remittances are likely to increase further due to seasonal factors such as Ramadan, Eid-ul-Fitr & Eid-ul-Adha. Similarly, exports and imports are projected to improve due to the expansion in economic activity.

All these factors will help to keep the CAD within manageable limits, the report anticipated. 

In addition, to improve the agriculture sector's productivity, the government remains committed to supporting the farmers through various initiatives. Favourable weather plays a crucial role in achieving the production targets.

According to PMD's weather outlook, the relatively dry conditions may cause water stress for Rabi crops, especially wheat in rain-fed areas.

The recent monthly performance of LSM sector suggests a potential recovery in up-coming months.

In January, LSM growth is expected to be supported by rising imports of machinery and raw materials, along with increased cement dispatches.

Moreover, the decline in inflation and the accommodative monetary policy are likely to further boost business confidence to support the LSM recovery.

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