Consumer Price Index (CPI) inflation in Pakistan registered a moderate rise in July 2025, reflecting both sector-specific pressures and seasonal trends. Official data shows that inflation was recorded at 4.1 percent year-on-year (YoY), up from 3.2 percent in June 2025, but significantly lower than the 11.1 percent seen in July 2024. This trend underscores the shift from last year’s high inflationary cycle toward a more stable, though still rising, price environment.
On a month-on-month (MoM) basis, CPI inflation increased by 2.9 percent in July 2025. This compares to a marginal 0.2 percent increase in June 2025 and a 2.1 percent rise during the same month last year. The higher MoM reading indicates a short-term pickup in price pressures, partly influenced by energy and services-related adjustments.
Breaking down the YoY contributions, health-related expenses posted the highest rise at 10.8 percent, followed closely by education at 10.2 percent. These two categories underline the persistent increase in the cost of essential services, putting pressure on household budgets. Clothing and footwear rose by 8.4 percent, while restaurants and hotels saw a 7.7 percent jump, reflecting demand-side factors as well as input costs.
Other contributors included alcoholic beverages and tobacco, up 3.7 percent, and housing, water, electricity, gas, and fuels, which recorded a 3.6 percent increase. Furnishings and household equipment maintenance rose 3.3 percent, while non-perishable food items edged higher by 2.6 percent. Transport costs also moved upward by 2.7 percent, while communication posted a marginal rise of 0.5 percent.
In contrast, perishable food items provided some relief, with prices declining by 8.3 percent compared to the same period last year. Analysts point out that better seasonal availability and improvements in supply contributed to this decline, partially offsetting upward movements in other categories.
The Sensitive Price Indicator (SPI), which tracks weekly changes in essential items, showed stability during the week ending August 21, 2025, posting a marginal decline of 0.01 percent. Out of 51 monitored items, prices of 8 items decreased, 18 increased, and 25 remained unchanged, reflecting a mixed but largely stable short-term trend in consumer goods.
Economists observe that the overall inflation picture presents a more moderate pace compared to the previous year’s double-digit levels, which is a positive development for both households and policymakers. However, the rise in health and education costs points to structural pressures that may persist, requiring targeted policy attention.
Energy-related categories also remain sensitive to global fuel price movements, meaning that future inflationary trends could fluctuate based on international market dynamics. For now, the government’s monetary and fiscal measures appear to be helping anchor inflation expectations, though sustained stability will depend on controlling service sector costs and ensuring continued supply-side improvements in food markets.
As the economy transitions toward a more balanced inflation environment, analysts stress the importance of monitoring core sectors such as health, education, and housing, which have long-term impacts on living standards and economic competitiveness.
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