By Staff Reporter
KARACHI: Consumer price inflation slowed to 3% in August 2025, dipping below government and analyst expectations and marking a significant retreat from the record highs seen two years ago, according to data released by the Pakistan Bureau of Statistics on Monday.
The Consumer Price Index (CPI) reading, down from 4.1% in July, signals a continued cooling of price pressures in the South Asian nation, offering potential relief to policymakers grappling with economic stabilisation.
On a month-on-month basis, the CPI fell by 0.6% in August, a sharp reversal from the 2.9% increase recorded in July and compared with a 0.4% rise in August 2024. The average CPI inflation for the first two months of fiscal year 2025 (July-August) stood at 3.53%, a steep decline from 10.36% in the same period last year.
The lower-than-expected inflation figure defied projections from both the government and market analysts. The Finance Ministry, in its monthly economic report, had anticipated inflation to hover between 4% and 5% for August. Similarly, Insight Securities, a Karachi-based brokerage, had forecast a 4.1% year-on-year rate, citing rising food prices offset by lower electricity charges and a decline in liquefied petroleum gas prices. “Headline inflation is estimated at 4.1% for August 2025, as compared to 9.6% in the same period last year,” Insight Securities noted in a research note, highlighting the moderating impact of energy costs.
Pakistan’s inflation trajectory has been on a downward path since May 2023, when the CPI surged to a record 38%, driven by soaring energy and food prices amid currency depreciation and fiscal challenges. The latest data underscores the effectiveness of monetary and fiscal measures, including high interest rates and subsidy adjustments, in taming price growth. However, the decline also reflects softer demand in an economy still navigating structural reforms tied to international lending programs.
The urban CPI inflation rate rose 3.4% year-on-year in August, down from 4.4% in July and significantly lower than the 11.7% recorded in August 2024. On a monthly basis, urban inflation contracted by 0.7%, compared with a 3.4% increase in July. In rural areas, CPI inflation grew by 2.4% year-on-year, down from 3.5% in July and 6.7% in August 2024, with a month-on-month decline of 0.5%.
Non-food, non-energy inflation, a key measure of core price pressures, also eased. In urban areas, it rose 6.9% year-on-year in August, slightly down from 7.0% in July, while rural core inflation increased by 7.8%, compared with 8.1% in the previous month. These figures suggest that while underlying price pressures persist, they are moderating gradually.
The Sensitive Price Indicator (SPI), which tracks the cost of essential goods, rose 2.6% year-on-year in August, rebounding from a 0.9% decline in July but significantly lower than the 10.8% increase in August 2024. On a monthly basis, SPI inflation accelerated to 3.2%, up slightly from 3.1% in July.
In contrast, the Wholesale Price Index (WPI) signaled deflationary pressures, falling 1.0% year-on-year in August, compared with a 0.5% decline in July and a 6.3% increase in August 2024. Month-on-month, WPI decreased by 0.2%, a slower decline than the 1.2% drop in July.
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