Pakistan’s Inflation Rate Eases to 3% in August 2025

Pakistan’s monthly inflation witnessed a notable decline in August 2025, primarily driven by lower food and energy costs, offering some relief to households amid economic pressures.

Month-on-Month Decline

According to official data, inflation dropped by 0.65% on a month-on-month (MoM) basis in August compared to July. The decline was more pronounced in urban areas, where CPI fell by 0.73%, while in rural regions it eased by 0.52%.

The fall was largely attributed to a significant reduction in perishable food prices—including fresh fruits, vegetables, and potatoes—as well as a decrease in electricity charges.

Food Prices

The food and non-alcoholic beverages category, which carries the heaviest weight in the CPI basket, displayed a mixed trend.

Perishable food items dropped sharply by 12.07% MoM, with fresh fruits, vegetables, and potatoes seeing major declines.
Non-perishable food items, however, rose by 0.57%, with staples such as rice, milk, and meat recording slight price increases.

Energy Costs

Energy also played a role in reducing overall inflation.

Electricity charges fell by 6.87% MoM,
Motor fuel prices dropped by 1.51%, helping offset increases in other categories.

Non-Food Items

While food and energy prices declined, some non-food categories registered increases:

Education costs rose by 1.28% MoM,
Health services increased by 0.71%, reflecting higher service-related expenditures.

Yearly Inflation Trends

On a year-on-year (YoY) basis, inflation in August rose by 3.0% compared to the same month last year.

Urban inflation increased by 3.38%,
Rural inflation climbed by 2.43%.

Despite the increase, lower prices of key perishable items such as onions, tomatoes, and fresh vegetables helped keep the overall YoY inflation rate contained.

Average Inflation for FY2025-26

For the first two months of the 2025-26 fiscal year (July–August), the average inflation rate stood at 3.53%, compared to the same period last year.