Pakistan June Inflation Expected at 3.5–4.0% YoY

Staff Report

ISLAMABAD: Pakistan’s Consumer Price Index (CPI) for June 2025 is expected to clock in at 3.5-4.0% YoY, taking the FY25 average to 4.64% compared to 23.41% in FY24. The MoM inflation in June 2025 is expected to clock in at +0.6%.

Inflation is expected to be higher due to an uptick in food prices by 1.3% MoM due to Eid festivities. The tomato and potato prices are expected to rise by 64% and 24%, respectively. However, this was partially offset by a 33% decrease in chicken prices.

The housing, water, electricity, and gas segment is expected to witness a rise of 0.26% MoM in Jun 2025 due to an increase in electricity prices by 3.04%, which is mostly offset by an 8% decrease in Liquefied Petroleum Gas (LPG).

Electricity prices have increased fuel cost adjustment for Jun 2025 has arrived at a positive Rs0.93/Kwh, higher than the previous month’s negative adjustment of Rs0.29/Kwh. The 2 quarterly adjustments and PDL diversion subsidy are intact in Jun 2025.

The transport segment is expected to witness a fall of 0.4% MoM due to a 1% fall in fuel prices.

Analysts Predict inflation at 28% in January 2023

The full year inflation of 4.64% is well within our projected range of 4.5-5.0% for FY25. For FY26, we expect inflation to average around 6-7%. The central bank also projects inflation to remain in its targeted range of 5-7%.

Real Rate in Jun 2025: With inflation expectations of 3.5-4.0% for Jun 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 that Pakistan inflation is expected to average 5% for FY25 before picking up to 8% in FY26,” Topline said.

Key Risks: Any major deviation in commodity prices from current levels may result in a change in inflation estimates.