Karachi: Pakistan's Consumer Price Index (CPI) for June 2025 recorded a 3.2% increase, bringing the fiscal year 2025 average to 4.5%, a significant decrease from the previous year's 23.4% average. This marks a notable shift in the country's inflationary trend.

The State Bank of Pakistan (SBP) recently decided to keep the policy rate steady at 11% during its most recent Monetary Policy Committee meeting. The central bank pointed to rising imports and ongoing tensions in the Middle East as primary factors contributing to uncertainty in commodity markets and inflation projections.

In June 2025, urban core inflation softened to a year-on-year rate of 6.9%, while rural core inflation decreased to 8.6%. These figures suggest a broader easing of inflationary pressures across different sectors of the economy.

Despite an 11 percentage point reduction in the policy rate over the past year, the real interest rate remains around 7.8 percentage points. Analysts suggest this could justify further rate cuts in the upcoming fiscal year 2026.

Looking ahead, projections for the fiscal year 2026 estimate the average CPI to be approximately 5.9%. These estimates assume stable global oil prices, though a higher-than-anticipated depreciation of the Pakistani rupee could pose an upside risk to these forecasts.