Pakistan’s headline inflation is expected to decline slightly in June 2025, dropping to 3.1% from 3.5% in May. Brokerage firm JS Global attributes this to the fading base effect and stabilizing prices across key sectors.
The average inflation for the ongoing fiscal year (FY25) could settle around 4.6%. This is a major improvement from FY24’s average inflation of 23.9%. Experts believe the decline shows that Pakistan is gradually exiting a period of extreme price volatility.
Food inflation, which affects low-income groups the most, is expected to rise 2.8% YoY in June. However, prices of some items like vegetables and grains have dropped. This may result in a slight monthly dip in overall food inflation.
Meanwhile, inflation in the housing, gas, and electricity segment is projected to decline by 4% YoY. This is largely due to a recent reduction in electricity tariffs. Core inflation, which excludes food and energy, is still higher — expected at around 8.5%
The State Bank of Pakistan kept its policy rate at 11% in its latest meeting. It has slashed rates by 1,100 basis points over the last year. However, the central bank remains cautious due to global risks, such as supply disruptions and volatile commodity prices. Another review is due in July.