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

Pakistan’s headline inflation eased to 3% year-on-year (YoY) in August 2025, down from 4.1% recorded in July 2025, according to data released by the Pakistan Bureau of Statistics (PBS) on Monday. On a month-on-month (MoM) basis, inflation decreased by 0.65% in August compared to July. The urban CPI registered a sharper decline of 0.73%, while the rural CPI dropped by 0.52%. This reduction was primarily driven by a significant fall in the prices of perishable food items, including fresh fruits and vegetables, as well as a decrease in electricity charges. Food Prices: The food and non-alcoholic beverages category, which holds the largest weight in the CPI basket, saw a mixed trend. While perishable food items recorded a sharp decline of 12.07% on a monthly basis, non-perishable food items rose by 0.57%. Items such as fresh fruits, vegetables, and potatoes saw significant price drops, while staples like rice, meat, and milk experienced slight increases. Energy Costs: Electricity charges and motor fuel prices also contributed to the overall decline in inflation, with electricity costs dropping by 6.87% and motor fuel by 1.51% on a monthly basis. Non-Food Items: In contrast, non-food categories such as education and health services saw price increases. Education costs rose by 1.28% MoM, while health services increased by 0.71%. On a yearly basis, the CPI for August 2025 increased by 3.0% compared to August 2024. Urban inflation rose by 3.38%, while rural inflation increased by 2.43%. The decline in perishable food prices played a significant role in keeping the overall inflation rate in check, with items like onions, tomatoes, and fresh vegetables showing substantial YoY price reductions. For the first two months of the fiscal year 2025-26 (July-August), the average inflation rate stood at 3.53%, compared to the same period last year. Urban areas recorded an average inflation rate of 3.90%, while rural areas saw a lower rate of 2.98%.