Islamabad, June 17, 2025: Pakistan’s Consumer Price Index (CPI) for June 2025 is expected to reach between 3.5 and 4.0 percent on a year-on-year (YoY) basis, making the average inflation rate for FY25 to reach 4.64 percent. This percentage is notably lower than the 23.41 percent recorded in FY24.
On a month-over-month (MoM) scale, inflation for June 2025 is expected to settle at around +0.6 percent, as per a report published by brokerage house Topline Securities.
The rise in inflation is largely attributed to a climb in food costs by 1.3 percent MoM due to Eid-related demand. Prices of tomatoes and potatoes are predicted to rise by 64 percent and 24 percent respectively. However, this increase is somewhat balanced by a 33 percent drop in chicken rates, the report highlighted.
The housing, water, power, and gas category is likely to see a 0.26 percent MoM increase in June 2025, primarily because of a 3.04 percent surge in electricity tariffs, though partly countered by an 8 percent decline in Liquefied Petroleum Gas (LPG) charges.
Electricity rates have increased due to a fuel cost adjustment (FCA) for June 2025, recorded at a positive Rs. 0.93/Kwh, which is higher than the previous month’s negative adjustment of Rs. 0.29/Kwh. Additionally, the two quarterly tariff revisions and Petroleum Development Levy (PDL) adjustment remain unchanged for June 2025.
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The transportation category is anticipated to experience a decrease of 0.4 percent MoM, following a 1 percent reduction in fuel charges.
Topline stated that the yearly inflation figure of 4.64 percent stays well within its forecasted band of 4.5–5.0 percent for FY25. Looking ahead to FY26, inflation is predicted to average between 6 and 7 percent. The State Bank of Pakistan (SBP) has also maintained its target band of 5–7 percent for inflation.
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Given the CPI projection of 3.5–4.0 percent in June 2025, real interest rates are expected to rise sharply to 700–750 basis points (bps), far surpassing Pakistan’s long-term average of 200–300 bps.
Global credit rating agency Fitch, in its recent upgrade report, also noted that Pakistan’s inflation is anticipated to average 5 percent in FY25 and may increase to 8 percent in FY26.
Any significant fluctuation in global commodity values may alter the current inflation forecasts, the report cautioned.
