Pakistan inflation inches up 3.5% year-on-year in May 2025
ISLAMABAD: Pakistan's annual inflation rate rose to 3.5% in May, higher than the April 2025 reading of 0.3%, data from the statistics bureau showed on Monday.
On a month-on-month basis, inflation 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. The CPI inflation average during 11MFY25 stood at 4.61 percent, compared to 24.52% in 11MFY24.
Inflation has cooled significantly, easing from 37.97% in May 2023.
The CPI reading is higher than the government's expectations. In its monthly economic report released last week, the finance ministry expected inflation to ease to between 1.5% and 2% year-on-year in May, before picking up to 3%-4% in June.
'Improved weather conditions, better crop yields and a stable exchange rate have helped reduce inflation to a historical low,' the finance ministry report had said, adding that 'inflation is projected to remain between 1.5-2.0% in May, with a possible rise to 3.0-4.0 percent by June 2025.'
The latest CPI reading was also higher than 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 percent for May. The base effect is now fading, signaling a return to normalized price trends. This is likely to take 11MFY25 average inflation to 4.7%, down from 11MFY24 average of 24.9%,' JS Global had said in a report.
Last month, the State Bank of Pakistan 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 1,100 bps since June from an all-time high of 22%.
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