ISLAMABAD: Pakistan’s inflation is expected to remain between 3–4% in June, the country’s finance ministry said in its monthly economic outlook report on Monday, reflecting a sharp decline from the record highs of 2023, when inflation peaked at 38% amid political turmoil and external account pressure.
Annual inflation rose to 3.5% in May 2025, up from just 0.3% in April, according to official data from the Pakistan Bureau of Statistics. However, it remains far below the 38% peak recorded in May 2023 amid political turmoil and external account pressure.
“Inflation is expected to remain within the range of 3.0–4.0 percent for June 2025,” the finance ministry said, citing stable food supplies and fiscal discipline.
The ministry said recent economic indicators showed signs of recovery, with increased lending to the private sector suggesting a pickup in production and business confidence. On the external front, it projected that higher remittances from overseas workers and a modest uptick in exports would help maintain a current account surplus for the full fiscal year ending June 30, 2025.
From July 2024 to April 2025, federal revenue growth outpaced expenditures, which the ministry attributed to the effectiveness of its fiscal reform measures. Net federal receipts grew by 44.4% to Rs8,124.2 billion, up from Rs5,627.5 billion a year earlier.
“The rise in revenues is primarily contributed by 68.1% growth in non-tax collections,” the report said. “Similarly, tax collection witnessed a significant increase, as in Jul-May FY2025, it grew by 25.9% to Rs10,233.9 billion from Rs8,125.7 billion last year.”
Breakdowns of tax categories showed a 33.8% increase in federal excise duty, a 27% rise in direct taxes, a 26.5% jump in sales tax, and a 16.3% increase in customs duties.
Independent analysts say the macroeconomic outlook is improving, though risks remain.
Brokerage house Topline Securities estimated on Monday that June 2025 inflation will clock in at around 3.2%, compared to 12.6% in the same month last year. This would bring average inflation for FY2025 to 4.6%, a significant drop from 23.9% in FY2024.
On a month-on-month basis, Topline expects a slight 0.2% increase in overall prices, driven largely by a 0.4% rise in the housing index due to fuel cost adjustments in electricity bills. However, food prices are forecast to decline by 0.5%, led by falling poultry prices.
Within the sensitive price index (SPI) basket, sharp price increases were observed in tomatoes (59.3%), potatoes (26.4%), eggs (7.4%), fresh fruits (5.7%) and onions (5.0%), while notable declines were seen in chicken (-32.5%), fresh vegetables (-12.2%), LPG (-6.6%), vegetable ghee (-0.4%), and cooking oil (-0.4%).
Topline said the recently announced FY2026 federal budget was broadly non-inflationary, with minimal changes to the tax structure and no major new levies, in line with IMF-supported fiscal goals. However, it cautioned that the government’s move to raise fixed charges for domestic gas consumers could push inflation slightly higher in coming months.
With gas having a weight of about 1.1% in the urban consumer price index, the brokerage estimated the hike could result in a 23% month-on-month increase in the gas index, translating to a 0.85 percentage point uptick in headline inflation.
Looking ahead, Topline projected that average inflation for FY2026 would hover around 5.4%, assuming no major shocks to the domestic supply chain or global commodity prices. It also expects the central bank to keep interest rates steady, noting that the full impact of recent rate cuts, totaling 1,100 basis points, has yet to fully transmit through the economy.
