Inflation in Pakistan Expected to Reach 3.5-4% in June 2025

Pakistan’s Consumer Price Index (CPI) for June 2025 is expected to clock in at 3.5-4.0 percent year-on-year (YoY), taking FY25 average to 4.64 percent compared to 23.41 percent in FY24. While the month-on-month (MoM) inflation in June 2025 is expected to clock in at +0.6 percent, according to a report by brokerage firm Topline Securities. Inflation is expected to be higher due to an uptick in food prices by 1.3 percent MoM due to Eid festivities. The tomatoes and potato prices are expected to rise by 64 percent and 24 percent, respectively. However, this was partially offset by 33 percent decrease in chicken prices, the report noted. Housing, water, electricity and gas segment is expected to witness a rise of 0.26 percent MOM in June 2025 due to an increase in electricity prices by 3.04 percent which is mostly offset by an 8 percent decrease Liquefied Petroleum Gas (LPG). Electricity prices have increased fuel cost adjustment for June 2025 has arrived at positive Rs. 0.93/Kwh, higher than previous month negative adjustment of Rs. 0.29/Kwh. The 2 quarterly adjustments and PDL diversion subsidy is intact in June 2025. Transport segment is expected to witness a fall of 0.4 percent MOM due to a 1 percent fall in fuel prices. Topline said that the full year inflation of 4.64 percent is well within its projected range of 4.5-5.0 percent for FY25. For FY26, it expects inflation to average around 6-7 percent. The State Bank of Pakistan (SBP) also projects inflation to remain in its targeted range of 5-7 percent. With inflation expectations of 3.5-4.0 percent for June 2025, real rates will surge to 700-750bps, significantly higher than Pakistan’s historic average of 200- 300bps. Fitch in its recent rating upgrade note also highlighted Pakistan inflation to average 5 percent for FY25 before picking up to 8 percent in FY26. Any major deviation in commodity prices from current levels may result in change in inflation estimates, the report said.