Inflation in Pakistan rises to 3.5% in May 2025

Headline Inflation YoY

Pakistan’s headline inflation clocked in at 3.5% on a year-on-year basis in May 2025, a reading higher than that of April 2025 when it stood at 0.3%, showed Pakistan Bureau of Statistics (PBS) data on Monday.

On a month-on-month basis, it decreased by 0.2% in May 2025, as compared to a decrease of 0.8% in the previous month and a decrease of 3.2% in May 2024.

CPI inflation average during 11MFY25 stood at 4.61% as compared to 24.52% in 11MFY24.

Inflation in Pakistan has been a significant and persistent economic challenge, particularly in recent years. In May 2023, the CPI inflation rate hit a record high of 38%. However, it has been on a downward trajectory since then.

Last month, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) cut the key interest rate by 100 basis points (bps) to 11%, the lowest policy rate since March 2022 (9.75%).

The central bank has cut the rate by 1,100bps since June from an all-time high of 22%.

The CPI reading is higher than the government’s expectations.

The Finance Ministry in its monthly economic report expected inflation to ease to between 1.5% and 2% year-on-year in May, before picking up to 3%-4% in June.

“Exports and remittances are expected to maintain their upward trend in the coming months, keeping the current account within a manageable range,” the ministry said.

Meanwhile, the latest CPI reading was also higher than the projections made by several brokerage houses.

JS Global projected Pakistan’s headline inflation to inch up to 2.7% in May.

“Pakistan’s CPI is expected to clock in at 2.7% for May. The base effect is now fading, signalling a return to normalised price trends. This is likely to take 11MFY25 average inflation to 4.7%, down from 11MFY24 average of 24.9%,” said JS Global.

Meanwhile, Insight Securities, another brokerage house, expected headline inflation to clock in at 3.4% in May.

Urban, rural inflation

The PBS said CPI inflation urban increased to 3.5% on year-on-year basis in May 2025, as compared to 0.5% of the previous month and 14.3% in May 2024.

On month-on-month basis, it increased to 0.1% in May 2025, as compared to a decrease of 0.7% in the previous and a decrease of 2.8% in May 2024.

CPI inflation rural increased to 3.4% on year-on-year basis in May 2025 as compared to a decrease of 0.1% in the previous month and 8.2% in May 2024.

On month-on-month basis, it decreased by 0.5% in May 2025 as compared to a decrease of 1.0% in the previous month and a decrease of 3.9% in May 2024