By Staff Reporter
ISLAMABAD: Pakistan’s headline inflation accelerated sharply to 5.6% year-on-year in September, data from the Pakistan Bureau of Statistics showed on Wednesday, dashing the finance ministry’s hopes of a contained rise after devastating floods hammered the economy.
The consumer price index reading marked a big jump from August’s 3% and came in well above the ministry’s forecast of 3.5-4.5%, underscoring the heavy toll from an unusually fierce monsoon season that has submerged swathes of farmland and disrupted supply chains.
Floodwaters, triggered by relentless rains starting in late June and peaking through September, have battered densely populated areas, particularly in Punjab province, the country’s agricultural heartland. The disaster has ravaged crops and strained food prices, a key driver of inflation in a nation already grappling with high debt and import reliance.
On a month-on-month basis, the CPI climbed 2% in September, reversing a 0.6% drop in August and contrasting with a 0.5% decline a year earlier.
Urban inflation, which tracks prices in cities, rose 5.5% year-on-year in September, up from 3.4% the prior month and a steep fall from 9.3% in September 2024. Month-on-month, it gained 1.5%, after a 0.7% dip in August and a 0.5% fall last year. In rural areas, where farming communities bear the brunt of weather shocks, inflation climbed even higher at 5.8% year-on-year, compared with 2.4% in August and 3.6% a year ago. Month-on-month, rural prices surged 2.8%, swinging from a 0.5% decline in both August and September 2024.
The finance ministry, in its monthly outlook, had pinned hopes on a milder uptick, blaming the deluge for any pressure. “As a result, inflation is expected to rise temporarily but remain contained within the 3.5–4.5% range in September 2025,” the ministry had stated.
The unexpectedly hot print could complicate the central bank’s efforts to ease monetary policy. The central bank had kept its benchmark interest rate unchanged at 11% for a third consecutive meeting in September, opting for caution as floods ravage the nation’s agricultural heartland and threaten to stoke food inflation just as the economy shows signs of stabilization.
The move balances recent progress against fresh headwinds. After 1,100 basis points of cuts from a 22% peak between June 2024 and May 2025, the bank has paused as inflation dipped to 4.1% year-on-year in July and 3% in August. Those figures reflected swings in food and energy, with core inflation cooling more gradually.
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