ISLAMABAD : Pakistan’s Consumer Price Index (CPI) for Jun 2025 is expected to clock in at 3.5-4.0% YoY, taking FY25 average to 4.64% compared to 23.41% in FY24. The MoM inflation in Jun 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 tomatoes and potato prices are expected to rise by 64% and 24%, respectively. However, this was partially offset by 33% decrease in chicken prices.
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 Liquefied Petroleum Gas (LPG).
Electricity prices have increased fuel cost adjustment for Jun 2025 has arrived at positive Rs0.93/Kwh, higher than previous month negative adjustment of Rs0.29/Kwh. The 2 quarterly adjustments and PDL diversion subsidy is intact in Jun 2025.
Transport segment is expected to witness a fall of 0.4% MoM due to a 1% fall in fuel prices.
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%. 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 Pakistan inflation to average 5% for FY25 before picking up to 8% in FY26.
According to Topline Securities any major deviation in commodity prices from current levels may result in change in inflation estimates
