May Month Inflation Rises to 3.5%, PBS Reports

Islamabad, June 2 — Pakistan’s consumer price inflation spiked to 3.5% year-on-year in May 2025, a sharp rise from April’s 0.3%, overshooting both government and market projections, the Pakistan Bureau of Statistics (PBS) reported Monday. Month-on-month, inflation eased by 0.2%, a slower decline than April’s 0.8%, signaling a waning disinflationary trend. For the first 11 months of FY2024-25, average inflation stood at 4.61%, a stark drop from last year’s 24.52%, underscoring a significant disinflationary shift.

The May uptick stems from a fading base effect—May 2023 saw a 38% CPI surge—while exceeding the Ministry of Finance’s 1.5%-2% forecast and JS Global’s 2.7% and Insight Securities’ 3.4% projections. This follows the State Bank of Pakistan’s (SBP) 100 basis point rate cut to 11%, the lowest since March 2022, after 1,100 basis points of cuts since June 2023. Urban CPI hit 3.5% year-on-year (from 0.5%), with a 0.1% monthly rise, while rural CPI reached 3.4% year-on-year (from -0.1%), dropping 0.5% monthly.

Analysts warn the disinflation cycle may have bottomed out, with energy, food, and currency dynamics likely to normalize prices. The Finance Ministry emphasized a controlled current account, buoyed by exports and remittances, to curb inflationary pressures. Web context notes Pakistan’s economic fragility (e.g., 12% energy cost rise, web ID: 0), while X posts show mixed sentiment—some welcome low inflation, others fear price hikes. Critically, the narrative of “stability” may mask emerging risks—web sources highlight currency volatility, and X sentiment suggests distrust in sustainability, hinting at future challenges.