By Staff Reporter
KARACHI: Pakistan’s consumer inflation surged to 4.1% in July 2025 from a year earlier, accelerating from 3.2% in June and topping expectations, as rising costs for food, fuel, and medicines added pressure on households, the Pakistan Bureau of Statistics (PBS) reported on Friday.
The uptick, which came in above the 3.1% projected by analysts, highlights the challenges facing the South Asian nation as it navigates economic reforms tied to a $7 billion International Monetary Fund program. Month-on-month, consumer prices climbed 2.9% in July, the PBS said, signaling a sharp escalation in living costs.
Urban inflation rose to 4.4% year-on-year in July, up from 3.0% in June and a steep drop from 13.2% in July 2024. On a monthly basis, urban prices jumped 3.4%, compared with a modest 0.1% increase in June. Rural inflation, meanwhile, edged up to 3.5% year-on-year from 3.6% in June, well below the 8.1% recorded a year ago. Rural prices rose 2.2% month-on-month, matching July 2024’s increase but accelerating from 0.5% in June.
The finance ministry had pegged July inflation in a range of 3.5% to 4.5%, citing stable prices and better supply conditions after last year’s cooldown from double-digit levels. But the higher-than-anticipated reading underscores persistent price pressures despite those efforts.
The State Bank of Pakistan kept its key interest rate at 11% this week, pointing to a worsening inflation outlook. The bank’s monetary policy committee said Wednesday that energy prices, particularly gas, had climbed more than expected, stressing that the real policy rate must stay “adequately positive” to anchor inflation within its 5% to 7% target range.
Pakistan’s economic overhaul, part of the IMF deal, includes a contractionary budget passed in June to rein in the fiscal deficit. While aimed at long-term stability, the measures are stoking short-term price spikes, analysts say.
Weekly data showed uneven shifts in everyday goods. Tomato prices soared 17.26%, chicken rose 4.76%, and bananas gained 2.97%, while eggs fell 1.80%, firewood dipped 1.11%, and cooked beef eased 1.08%. Over the year, onions plunged 49.32%, tomatoes dropped 42.31%, and garlic shed 23.78%. But steep rises hit other items: ladies’ sandals spiked 55.62%, gas charges for the first quarter jumped 29.85%, and sugar climbed 21.66%.
Short-term inflation, tracked by the Sensitive Price Index (SPI), fell 0.9% year-on-year in July, an improvement from a 1.9% drop in June and a stark contrast to a 15.7% surge in July 2024. Month-on-month, however, the SPI rose 3.1% in July 2025, up from no change in June and 2.0% a year earlier. The index posted its sharpest weekly gain in recent months, up 4.07% for the week ending July 24, fueled by soaring vegetable and petroleum prices.
The government’s recent hikes in petroleum rates have rippled through the economy, lifting transport costs and pushing up prices for perishable goods. “Inflation for July 2025 is projected at 3.1%, a sharp decline from 11.1% in the same period last year, indicating continued easing in price pressures,” Ismail Iqbal Securities said before the data release. The actual figure, however, suggests those pressures remain stubborn.
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