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Journal of Finance & Economics Research - Volume 10, Issue 2 2025
By Muhammad Rizwan, Muhammad AsadUllah, Nayab Jumani
10.20547/jfer2510203
Keywords: Forecasting ARIMA Auto Regressive Moving Average Model Inflation CPI
The objective of the study is to forecast CPI inflation for the period 2023 to 2028 using ARMA & ARIMA techniques, which have been extensively used in the previous literature. We used the annual dataset from the ministry of finance from 2002 to 2023. The stationary tests indicated that CPI inflation was integrated of order 1. Therefore, we employed the ARIMA model for forecasting. The results indicated that R-square was 0.819, which implies that the model explains around 81 percent variation in inflation. Further, the F-statistics was 14.51 indicate that the overall model was significant. The ARIMA model ling results indicates that by 2028, the CPI inflation would be around 4.62 percent due to the policy intervention by the state bank of Pakistan aimed at lowering inflation. Moreover, our study forecast that the monetary tithing strategy for controlling inflation by the SBP would be effective in the medium to long term and lead to low and stable inflation in Pakistan. The study has several policy implications, which will enable Pakistan to pursue a path of low inflation, which are also consistent with the IMF requirements.
Submission Date: 24 Jun, 2025 Reviews Completed: 28 Aug, 2025Acceptance Date: 5 Sep, 2025 Publication Date: 30 Nov, 2025