Pakistan’s consumer price inflation (CPI) experienced a 3.2% year-on-year increase in June, the statistics bureau reported on Tuesday. This figure is largely consistent with the finance ministry’s projection of 3% to 4% issued just a day earlier.
On a month-on-month basis, prices saw a 0.2% rise in June, reversing the 0.2% decline observed in May.
In a note, Topline Securities indicated that the full-year inflation rate of 4.49% also falls comfortably within their expected range for FY25.
The brokerage firm noted that the pace of inflation has significantly decreased from an average of 23.41% in FY24. This reduction is primarily attributed to a 3.28% deflation in the housing, water, electricity, gas, and fuel sectors, largely due to a substantial 30% drop in electricity prices (comparing June 2025 to June 2024).
For FY26, Topline Securities anticipates the average inflation rate to hover around 6-7%.
With inflation reaching 3.59% for June 2025, the real interest rate registered at 650 basis points (bps). For FY26, the projected real rate is 400-500 bps, which is notably higher than Pakistan’s historical average of 200-300 bps.
“Any major deviation in commodity prices from current levels may result in a change in inflation estimates,” the note further cautioned.
This data follows the State Bank of Pakistan’s (SBP) decision in June to keep its key interest rate unchanged at 11%. The central bank stated in its latest monetary policy statement that while inflation might exhibit some near-term volatility, it is expected to gradually stabilize within the 5% to 7% target range.
These figures are also released just weeks after Pakistan unveiled its annual budget. This budget included new revenue generation measures and subsidy cuts, forming part of the country’s ongoing efforts to secure a long-term loan program from the International Monetary Fund (IMF).
Analysts have warned that increased energy and tax costs could potentially fuel inflation during the second half of the year.
The Pakistan Stock Exchange recorded a 2.3% gain on Tuesday, the first day of the new fiscal year, closing at an all-time high of 128475.7 points.
