Pakistan’s Inflation Rises to 4.1% in July 2025 Amid Soaring Food and Fuel Prices
The Pakistan Bureau of Statistics (PBS) has reported that consumer inflation jumped to 4.1% year-on-year in July, up from 3.2% in June. The surge is mainly attributed to rising prices of food, fuel, and medicines, putting pressure on household budgets.
Month-on-Month Inflation Also Increases
On a month-on-month basis, inflation rose 2.9% in July, reflecting a sharp increase in essential items.
Earlier, the Finance Ministry had projected July inflation to stay between 3.5% and 4.5%, citing stable prices and improved supply chains. However, actual figures came in at the higher end of the forecast range.
SBP Maintains Interest Rate Amid Inflation Concerns
The State Bank of Pakistan (SBP) recently kept its policy rate unchanged at 11%, citing a worsening inflation outlook. Its Monetary Policy Committee stated that energy prices, especially gas, have increased more than expected, raising concerns about inflation remaining within the 5-7% target range.
Short-Term Inflation Soars
Short-term inflation, measured by the Sensitive Price Index (SPI), rose 4.07% week-on-week ending July 24. The hike was driven by:
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Sharp increase in vegetable prices
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Surge in petroleum product rates
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Elevated transportation costs
This marked one of the steepest weekly price increases in recent months, mainly due to the rising cost of fuel, which affects logistics and food supply chains.
Economic Reforms Under IMF Program
Pakistan is currently implementing economic reforms as part of a $7 billion IMF program. The recently passed contractionary budget includes significant spending cuts aimed at reducing the fiscal deficit. However, these measures, combined with rising living costs, are placing additional pressure on consumers.
