KARACHI: Pakistan's annual inflation fell to 3.24 per cent in February from 3.96 per cent in January, the Pakistan Bureau of Statistics said on Monday, with the key factor being a fall in fuel prices.

On a month-on-month basis, prices rose 0.92 per cent in February.

Average inflation in the period from July to February was 5.45 per cent.

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Falling fuel prices were a major contributor to the decline in prices, said Shaukat Khan, the director of the bureau of statistics.

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Another factor responsible for the lower inflation rate is the lowering of the interest by the State Bank to a 10-year low in January.

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The slash in the interest rate had followed a previous decrease announced in November 2014.

The International Monetary Fund had also predicted that the Average inflation will ease to below 8pc in fiscal year 2014-15 and fall further thereafter, as inflation expectations will be anchored by tight monetary policy and sustainable fiscal policy.