ISLAMABAD, Oct 27 (Wealth Pakistan) – Pakistan’s inflation rose to 5.6 percent year-on-year in September 2025, compared to 3 percent in August, mainly due to temporary spikes in food and energy prices following flood-related disruptions and tariff adjustments.
Monthly and quarterly trends
According to the Finance Division’s Monthly Economic Update & Outlook (October 2025), the Consumer Price Index (CPI) for September showed moderate inflationary pressure. Annual inflation declined from 6.9 percent in the same month last year. On a month-on-month basis, prices increased by 2 percent compared to a 0.6 percent decline in August.
During July–September FY2026, inflation averaged 4.2 percent, significantly lower than 9.2 percent recorded in the corresponding period last year. The report said the latest increase largely reflected short-term food and energy price adjustments rather than structural inflation.
Category-wise price changes
Key contributors to the year-on-year CPI increase included education at 10.7 percent, health at 10.6 percent, clothing and footwear at 8 percent, and non-perishable food items at 6.5 percent. Smaller rises were observed in restaurants and hotels (6.1 percent), transport (4.2 percent), and housing, water, electricity, and gas (3.7 percent).
Meanwhile, declines were noted in perishable food items, which dropped 3.7 percent, and recreation and culture, down 2.7 percent. The Sensitive Price Indicator (SPI) for the week ending October 23 increased slightly by 0.22 percent, with 20 out of 51 items showing higher prices.
Factors behind the rise
The Finance Division said inflationary pressures were milder than initially expected given the flood impact. Supply chains recovered faster, and food availability improved, helping contain overall price growth. It added that inflation was expected to stay within the target range of 5–7 percent over the medium term.
Economists attributed the moderation to stable exchange rates, effective monetary management, and declining global commodity prices. One analyst noted that inflation was being managed effectively without hurting economic growth.
Outlook and risks
The report said consumer and business inflation expectations had eased, reflecting confidence in the government’s price stability measures. However, adjustments in energy tariffs remain a short-term risk.
The Finance Division projected inflation between 5 and 6 percent in October, citing easing food prices and steady fuel costs. It emphasized that continued fiscal discipline, stable reserves, and steady remittance inflows would help maintain price stability in the months ahead.