After reaching a historic low of 0.3% year-on-year in April 2025, Pakistan’s headline inflation is expected to rise to 2.7% in May, according to a report by JS Global. The increase is primarily due to the fading base effect from last year’s record highs, which had temporarily suppressed inflation readings.
In April, inflation had fallen sharply due to significant declines in food and energy costs, combined with a strong base effect from the previous year when inflation soared to 38% in May 2023 — the highest since records began in 1965. However, as the base effect weakens, price trends are gradually returning to normal.
JS Global projects food inflation to rise by 1.4% year-on-year in May, compared to a decline of 0.2% during the same month last year. Meanwhile, the housing, gas, and electricity index is expected to show a 3.3% year-on-year decline and a 2% month-on-month decrease, largely due to lower electricity tariffs implemented during the month.
The brokerage also estimates that core inflation, which excludes volatile food and energy prices, will remain high at around 9% YoY in May — a key figure that the State Bank of Pakistan (SBP) monitors when setting interest rates. In its last meeting, the SBP cut the policy rate by 100 basis points to 11%, part of a broader easing cycle that has reduced the rate by 1,100bps from its 22% peak.
With the next Monetary Policy Committee (MPC) meeting set for June 16, analysts believe another rate cut is possible if inflation remains under control. However, they caution that further reductions will depend on upcoming data and any external pressures, especially from global commodity markets and currency trends.