By Staff Reporter
ISLAMABAD: Inflation in Pakistan slowed to 3.2% in June from a year earlier, down from 3.5% in May and a sharp retreat from the 12.6% recorded in June 2024, data from the Pakistan Bureau of Statistics showed Tuesday.
The reading landed squarely within the finance ministry’s forecast range of 3% to 4% and helped cap the fiscal year 2025 average at 4.49%, the lowest in nine years.
The June figure signals a continued cooling of price pressures in the South Asian nation, which has wrestled with rampant inflation in recent years. For the full fiscal year ending June 2025, inflation averaged 4.49%, a steep drop from 23.41% in the prior year and the smallest annual increase since fiscal 2016.
Month-on-month, consumer prices ticked up by 0.2% in June, reversing a 0.2% decline in May but still below the 0.5% rise seen in June 2024. The slight upturn reflects a modest reacceleration in short-term price movements after months of softening trends.
Inflation trends diverged across Pakistan’s urban and rural areas. In cities, the consumer price index rose 3.0% year-on-year in June, down from 3.5% in May and a dramatic fall from 14.9% a year earlier. Month-on-month, urban inflation held steady at 0.1%.
Rural areas, however, saw inflation climb to 3.6% year-on-year, up from 3.4% in May, though well below the 9.3% of June 2024. On a monthly basis, rural prices jumped 0.5%, a sharp shift from May’s 0.5% drop.
Food inflation, a key driver of household costs, also eased. Urban food prices increased 4.2% from a year ago but fell 0.6% from May, offering some respite to city dwellers. In rural areas, food inflation slowed to 2.4% year-on-year, underscoring a broader moderation in this critical category.
Core inflation, which strips out volatile food and energy costs, slipped below 7% in June, a significant decline from 12.2% a year earlier. The pullback points to a steady unwinding of underlying price pressures across the economy.
Pakistan’s inflation story has been one of extremes in recent years. The consumer price index hit a record 38% in May 2023, fueled by economic turmoil and surging global commodity prices. Since then, a combination of government policies and stabilizing international markets has driven a steady decline, bringing inflation to levels not seen in nearly a decade.
The fiscal year 2025 average of 4.49% came in at the lower end of the government’s projected range of 4.5% to 5%, a target bolstered by falling prices for perishable goods and soft energy rates solid.
For June specifically, the finance ministry had anticipated inflation between 3% and 4%, a forecast the latest data neatly met. Analysts saw it coming too. JS Global pegged June inflation at 3.1%, while Insight Securities nailed the 3.2% outcome. “The base effect is now fading, signalling a return to normalised price trends,” JS Global noted in a research report, highlighting the diminishing impact of last year’s high readings on current comparisons.
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