Data released by the Pakistan Bureau of Statistics on Monday showed that the consumer price index (CPI) for March was up 20.7 per cent from the same month last year, the lowest reading in nearly two years and below the finance ministry’s projections for the month.

Compared with the previous month, inflation for March registered a 1.7pc rise.

The economy has been beset by inflation above 20pc since May 2022, registering a high of 38pc in May 2023, as it navigates contentious reforms it must implement as part of an International Monetary Fund (IMF) bailout programme.

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The country has also witnessed stunted growth, with GDP shrinking 0.17pc in the financial year 2023 as economic activity ground to a halt on the back of a historic high interest rate which currently stands at 22pc.

In February, annual CPI inflation clocked in at 23.1pc while there was no change month on month.

The IMF and the central bank projected that inflation would slow in the last quarter of the current financial year, which ends in June. But the March drop was sharper than expected.

The finance ministry said on Friday that inflation was expected to hover between 22.5pc and 23.5pc in March, citing the high base effect as well as favourable domestic and global factors.

On Sunday, the government announced another hike in fuel prices, raising them 3.5pc to Rs289.41 per litre.

The finance ministry said there were signals of growth prospects in the current year.

There have been increasing calls for a cut in the central bank’s main interest rate. It has left the rate unchanged for six straight policy meetings in a bid to spur growth.

The government has said it will approach the IMF again shortly for a longer-term programme after reaching a staff-level agreement for the second and final review of its nine-month $3 billion programme last month.