Inflation in Pakistan has plunged from 28.3 percent in January 2024 to 2.4 percent in January, 2025 year-on-year, presenting a dramatic shift from a record high of 38 percent in May 2023. This drop offers a respite to millions who have struggled to sustain their livelihoods with this high inflation rate. Is this relief a sustainable or a temporary pause before structural cracks re-emerge?

The State Bank of Pakistan’s (SBP’s) report, in its latest assessment, suggests this slowdown appears a fragile win, driven by short-term factors rather than deep structural reforms.

The inflation slowdown presents a complex story. The Consumer Price Index (CPI) basket, which tracks price changes, is primarily composed of food and non-food items. Food inflation, which spiked to 38.5 percent in August 2023, has now decreased to 1.8 percent percent.

Several factors explain this dramatic decline including favourable weather conditions, global decline in commodity prices, and government intervention in controlling prices of essential food items, particularly staples. In addition, the non-food component of inflation, particularly energy prices, a key contributor to the CPI basket, has also declined. A global decline in oil prices has contributed to........

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