Pakistan’s inflation rises 3.2% in June, F25 averages 4.49%

ISLAMABAD: Pakistan’s year-on-year consumer price index (CPI) inflation rose by 3.2 percent in June, according to the Pakistan Bureau of Statistics – closer to the finance ministry’s earlier forecast of 3 percent to 4 percent.

On a monthly basis, prices rose by 0.2 percent, reversing the same amount of decline seen in May.

Topline Securities noted that full-year inflation for FY25 is 4.49 percent, within its expected range. The firm attributed the decline from FY24’s average inflation of 23.41 percent to a 3.28 percent decline in housing, utilities and fuel – largely driven by a 30 percent drop in electricity prices compared to last June.

For FY26, Topline forecasts average inflation to be between 6% and 7%. The real interest rate was 6.5% in June 2025, and is expected to be between 4% and 5% in FY26 – notably higher than Pakistan’s historical average of 2% to 3%.

However, the brokerage warned that any sharp fluctuations in global commodity prices could affect future inflation projections.

The figure follows the State Bank of Pakistan’s decision last month to keep the benchmark interest rate unchanged at 11%. The central bank expects short-term inflation to fluctuate but plans to return it to its 5% to 7% target range in the coming months.

The release also comes shortly after the unveiling of Pakistan’s federal budget for FY26, which includes new tax and subsidy cuts aimed at securing a long-term deal with the International Monetary Fund (IMF).

Analysts have warned that rising energy and tax costs could push inflation higher later this year.

Meanwhile, the Pakistan Stock Exchange rose 2.3 percent on Tuesday – the first trading day of the new fiscal year – to close at a record high of 128,475.7 points.