By Staff Reporter
KARACHI: Pakistan’s annual consumer inflation slowed to 11.1% in June from 11.7% in May, official data showed on Wednesday, as lower fuel and transport costs offered households some relief even as food prices remained volatile and overall price growth stayed well above the central bank’s target range.
The reading from the Pakistan Bureau of Statistics marked the second consecutive monthly decline in the headline rate, though inflation has stayed in double digits since April, driven largely by an energy-led jump earlier in the year. A year earlier, in June 2025, the inflation rate stood at just 3.2%.
On a month-on-month basis, the consumer price index fell 0.3% in June, reversing a 0.5% increase in May and contrasting with a 0.2% rise in the same month last year.
For the fiscal year that ended in June, average inflation came in at 7.05%, up from 4.49% in the previous fiscal year, despite a high base of comparison from a year earlier.
The government has set a revised inflation target of 7.5% for the current fiscal year and projects 8.2% for the year ahead, though monthly readings have run well above those levels for months, pushed up chiefly by a sharp rise in petroleum prices tied to disruptions in the Middle East.
TRANSPORT LEADS THE DECLINE
The month-on-month easing in June was driven largely by a 7.22% drop in transport costs from May, even though transport charges remained 25.72% higher than a year earlier. Motor fuel prices fell 12.06% during the month.
Energy prices were revised down sharply in June, but the pass-through to broader inflation was limited. Analysts pointed to the continued disruption of the Strait of Hormuz, the shipping route through which most of Pakistan’s energy imports pass, as a factor keeping domestic fuel prices elevated relative to the scale of the decline in global crude.
Electricity charges fell 4.31% during the month, while liquefied hydrocarbon prices rose 1.79%.
Food inflation showed a mixed picture. Non-perishable food items rose 10.21% year-on-year, underscoring continued volatility in staple prices, while housing, water, electricity, gas and fuel costs climbed 15.5%, keeping pressure on household budgets.
At the item level, tomato prices surged 90.1% month-on-month, onions rose 20.8% and potatoes climbed 17.76%. Fresh vegetables overall were up 12.55%, while wheat flour, wheat products, vegetable ghee, wheat and cooking oil each posted smaller increases. Fresh milk rose 1.27%.
Those increases were partly offset by falling prices for chicken, down 22.44%, and eggs, down 10.74%, along with modest declines in pulses including moong, mash, beans, besan, grams, fish and masoor.
Among non-food items, newspaper prices jumped 14.84%, dopattas rose 3.78% and washing soap, detergents and matchboxes climbed 1.96%. Tailoring costs, tools and equipment, cotton cloth, medical tests and doctor’s clinic fees all posted smaller gains. Personal effects fell 6.19% and marriage hall charges dropped 4.04%.
URBAN-RURAL DIVERGENCE
Urban inflation stood at 11.2% year-on-year in June, compared with 10.9% in rural areas. On a monthly basis, urban prices fell 0.5% while rural prices were unchanged from May.
Food inflation rose 8.2% year-on-year in urban areas and 9.4% in rural areas, with month-on-month food prices up 1% in cities and 0.9% in the countryside. Non-food inflation, by contrast, remained elevated at 13.1% in urban areas and 12.3% in rural areas, extending a steady climb over recent months.
Core inflation, which strips out volatile food and energy components, stood at 8.7% in urban areas and 7.9% in rural areas in June.
RATE POLICY AND OUTLOOK
The State Bank of Pakistan raised its policy rate to 11.5% in April from 10.5% as inflation accelerated, and has held it steady since, including at last month’s Monetary Policy Committee meeting. The rate had previously been held at 10.5% since mid-December.
Arif Habib Limited, a brokerage, said in a note that the year-on-year rise in inflation had largely been driven by higher energy and transportation costs linked to elevated oil prices amid ongoing geopolitical tensions.
The Ministry of Finance, in its latest monthly outlook, said easing geopolitical tensions amid peace efforts in the Middle East had improved global market sentiment and pulled international crude prices back from recent highs. That, it said, was expected to ease imported inflationary pressure and support lower domestic fuel and transport costs going forward, while also helping contain the country’s oil import bill.
The ministry had forecast inflation would stay in a range of 11% to 12% for June, broadly in line with the reported outcome.
The central bank has said it expects inflation to remain in double digits for the next few months before gradually easing.
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