Pakistan’s annual inflation accelerates to 4.1% in July

A vendor fills a sack with rice in a wholesale shop at a market in Karachi, Pakistan, on April 3, 2025. (AP/File)
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Updated 01 August 2025
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Pakistan’s annual inflation accelerates to 4.1% in July

  • The central bank left the key interest rate unchanged at 11% this week
  • The SBP said the policy rate would keep inflation between 5%-7% range

ISLAMABAD: Pakistan’s consumer inflation accelerated to 4.1% year-on-year in July, up from 3.2% in June, driven by rising prices for food items, fuels and medicines, the statistics bureau said on Friday.

July’s consumer price inflation month-on-month was 2.9%, the bureau said.

The higher inflation reading follows the State Bank of Pakistan’s assessment of a deteriorating inflation outlook, leading it to leave the key interest rate unchanged at 11%.

The bank’s monetary policy committee said on Wednesday that energy prices, particularly for gas, had risen more than expected, and it considered the real policy rate should be adequately positive to keep inflation in the 5%-7% target range.

Pakistan is pushing through a series of economic reforms under a $7 billion International Monetary Fund program, including a contractionary government budget passed in June that slashes spending to curb the fiscal deficit.


Pakistan positions itself as ‘bridge builder’ to ease Middle East tensions as PM visits Saudi Arabia

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Pakistan positions itself as ‘bridge builder’ to ease Middle East tensions as PM visits Saudi Arabia

  • Islamabad says it is engaging regional capitals to keep diplomatic channels open amid Iran conflict
  • Foreign Office says Pakistan policy on Afghanistan unchanged amid cross-border militant attacks

ISLAMABAD: Pakistan is positioning itself as a bridge builder to help ease rising tensions in the Middle East, with Prime Minister Shehbaz Sharif traveling to Saudi Arabia for talks focused on regional peace and security, the Foreign Office said on Thursday.

Sharif left earlier in the day for what officials described as a brief visit to the Kingdom at a time when the region is facing heightened volatility after the United States and Israel launched airstrikes against Iran. Subsequently, Tehran said it was targeting American military bases in Gulf states, prompting condemnations from these countries, which said several strikes had hit civilian infrastructure.

The spillover of the conflict in the region has complicated diplomatic efforts aimed at calming the situation, but the Foreign Office spokesperson, Tahir Andrabi, said Pakistan had been in regular contact with capitals across the region since the crisis erupted and is trying to keep channels of communication open.

“And we are playing the role of a bridge builder in a sense that our principal position on issues with respect to sovereignty, international law and the UN Charter and with respect to dialogue and diplomacy is respected in all regional capitals,” Andrabi said during the weekly press briefing.

He said Prime Minister Sharif’s visit to Riyadh should be seen as part of ongoing coordination between Pakistan and Saudi Arabia on regional stability.

“The Prime Minister’s visit to Saudi Arabia is part of the coordination between Pakistan and Saudi Arabia on matters of regional peace and security and ending violence and hostilities,” he said.

“The Prime Minister’s visit should also be seen in the broader context of Pakistan’s efforts to advocate and facilitate an early cessation of hostilities and violence in the region, with the aim of paving the way for dialogue and diplomacy.”

Islamabad has condemned both the strikes on Iran and the retaliatory attacks launched from Iranian territory against Gulf states, urging all sides to show restraint and resolve their differences through diplomatic means.

“As you know, Pakistan had condemned the unwarranted attacks against the Islamic Republic of Iran,” Andrabi said, warning that such actions risk further destabilizing an already tense region. At the same time, he added, Pakistan had also condemned attacks carried out from Iran against Gulf states including Saudi Arabia, Bahrain, Jordan, Kuwait, Qatar and the United Arab Emirates, calling them violations of sovereignty.

He said Pakistan has remained diplomatically engaged since the crisis began. Deputy Prime Minister and Foreign Minister Ishaq Dar has spoken with his counterparts from several countries in the region to discuss the evolving situation.

The prime minister also held a telephone conversation on Wednesday with Iranian President Masoud Pezeshkian, during which the two leaders discussed regional developments.

Andrabi said Pakistan’s position was firmly rooted in international law and the principle that disputes should be resolved through dialogue.

PAK-AFGHAN CLASHES

Separately, the Foreign Office said Pakistan’s policy toward Afghanistan remains unchanged despite continued tensions over cross-border militant attacks.

“There is no qualitative change in our relations, in our way of how we engage with Afghanistan,” Andrabi said.

Pakistan has repeatedly accused the Afghan authorities of harboring militant groups and facilitating their cross-border attacks, an allegation denied by Kabul.

The two countries have witnessed fierce border clashes amid mounting tensions, with Pakistan saying it has targeted militant hideouts inside Afghanistan.

“We have emphatically communicated to the Afghan side and to our interlocutors that we need verifiable assurances from the Afghan side that their territory will not be used for terrorism against Pakistan,” Andrabi said.

“Since those assurances have not been received, we will continue with our existing policy with respect to that country.”

He said Pakistan reserved the right to respond to attacks originating from Afghan territory.

“We are under attack ... and in exercise of our right to self-defense, we do reserve the right to respond to these attacks.”