By Staff Reporter
KARACHI: The headline inflation is poised for a sharp rebound to 6.5% year-on-year in September after edging up to 3% in August, driven by flood-related spikes in food prices, brokerage Topline Securities said in a report on Wednesday.
The projected rise marks the highest annual reading in 11 months and comes amid severe flooding from an extended monsoon season that began in late June and has worsened through September, battering supply chains in densely populated areas, particularly Punjab province.
“Pakistan’s Consumer Price Index (CPI) for September 2025 is expected to clock in at 6.5–7% YoY vs. 3% in August 2025 and 6.93% in September 2024. On a month-on-month (MoM) basis, inflation for September 2025 is projected at +3.1%,” the report said.
That monthly increase would be the steepest in 26 months, largely propelled by an anticipated 8.75% jump in the food segment – the largest such monthly gain on record.
“The resurgence in food inflation is primarily on the back of supply-side effects on food products due to ongoing floods in the country,” it added.
The State Bank of Pakistan’s Monetary Policy Committee held the key policy rate steady at 11% earlier this week, pointing to the floods’ negative drag on the near-term economic outlook.
Food price pressures were led by tomatoes, which are seen rising 122% month-on-month, followed by wheat up 49%, wheat flour up 39% and onions up 35%. More modest gains included potatoes at 5.4%, rice at 4.3%, chicken at 4.1%, eggs at 3.5% and sugar at 2.7%.
Fruits are expected to hold steady month-on-month, while vegetable prices overall could ease by around 10%.
Offsetting some of the upward momentum, the housing, water, electricity and gas category is forecast to dip 0.24% month-on-month, thanks to a 2.19% drop in electricity charges.
That decline stems from a Quarterly Tariff Adjustment of 1.8881 rupees per kilowatt hour for August-October, coupled with a Fuel Charges Adjustment of minus 1.7856 rupees per kWh, compared with 0.7772 rupees in August, the report said. The pullback was partially cushioned by a 2.75% increase in liquefied petroleum gas prices.
At the projected 6.5-7% inflation rate, Pakistan’s real interest rates would climb to 400-450 basis points, well above the country’s historical average of 200-300 basis points, Topline said.
The brokerage cautioned that swings in global commodity prices represent “a major variable” that could reshape the inflation path ahead.
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