Pakistan’s Consumer Inflation Dips to 11.1% in June Amid Energy and Food Price Adjustments

ISLAMABAD: Pakistan’s consumer inflation rate experienced a slight decline in June, falling to 11.1% from 11.7% the previous month. According to data released by the Pakistan Bureau of Statistics on Wednesday, this dip was primarily driven by a reduction in the costs of energy and essential food items.

The modest decrease suggests that recent reductions in petrol and diesel prices have offered some relief to households. However, the overall downward pressure on inflation remains limited, as the government has not yet fully transferred the benefits of lower international oil prices to domestic consumers.

On a month-on-month basis, inflation saw a marginal decrease of 0.3% compared to May.

Inflation for the period between July 2025 and June 2026 was recorded at 7.05%, up from 4.49% during the same period last year, despite a high base effect. The government has since revised its inflation targets, projecting 7.5% for the current fiscal year and 8.2% for FY27.

The Consumer Price Index (CPI) has generally exceeded government projections due to unprecedented spikes in petroleum prices. While energy prices underwent a sharp downward revision in June, the impact was dampened by disruptions in the Strait of Hormuz, a critical transit route for Pakistan’s energy imports.

The June decline was largely attributed to a 7.22% monthly drop in transport costs, although transport charges remain 25.72% higher than they were in June 2025. Meanwhile, non-perishable food items surged by 10.21%, and costs for housing, water, electricity, gas, and fuels rose by 15.5%, continuing to strain household budgets.

In response to these inflationary pressures, the State Bank of Pakistan (SBP) raised its policy rate to 11.5% in April, up from 10.5%. This rate has since been maintained.

Annual data indicates that urban inflation stood at 11.2%, slightly higher than the 10.9% recorded in rural areas. On a monthly basis, urban prices dropped by 0.5%, while rural prices remained unchanged.

Food inflation in June rose by 8.2% in urban areas and 9.4% in rural areas. Month-on-month, food inflation increased by 1% in urban centers and 0.9% in rural regions. Non-food inflation, which has steadily climbed over the past few months, reached 13.1% in urban areas and 12.3% in rural regions.

Core inflation—which excludes volatile food and energy prices—was recorded at 8.7% in urban areas and 7.9% in rural areas for June.

Notable month-on-month price hikes in urban food sectors included tomatoes (90.1%), onions (20.8%), potatoes (17.76%), fresh vegetables (12.55%), wheat flour (2.17%), wheat products (2.12%), vegetable ghee (1.85%), wheat (1.72%), cooking oil (1.53%), and fresh milk (1.27%).

Conversely, price decreases were noted for chicken (22.44%), eggs (10.74%), moong (1.04%), mash (0.98%), beans (0.89%), besan (0.64%), grams (0.38%), fish (0.37%), and masoor (0.20%).

Non-food categories also saw significant increases, specifically for newspapers (14.84%), dopattas (3.78%), detergents and matchboxes (1.96%), liquefied hydrocarbons (1.79%), tailoring (1.74%), tools and equipment (1.66%), cotton cloth (1.60%), medical tests (1.48%), doctor clinic fees (1.47%), and furniture (1.21%).

Price reductions were observed in motor fuel (12.06%), personal effects (6.19%), electricity charges (4.31%), marriage hall fees (4.04%), transport services (0.56%), household textiles (0.15%), and solid fuel (0.03%).

Source link