Pakistan’s Inflation Rises to 3.5% in May 2025
In May 2025, Pakistan saw its inflation rate go up to 3.5% year on year, reports the Pakistan Bureau of Statistics (PBS). That is a moderate rise from April 2025 which saw inflation at 0.4%. Though the increase is small, it is a large-scale change from the early in the year drop. Also in the report by the PBS, which goes into great detail of many inflation indicators—CPI, SPI, WPI, and core inflation trends—these in turn present a full picture of what is going on in the economy. Pakistan’s Inflation remains under watch due to these shifting dynamics.
Compared to May of the previous year which is what we had in May 2025, that’s a drop in the inflation rate we saw. In 2024 in May, we had 11.8% inflation which is a very large drop off from what we had over the past 12 months. Also, we saw a small month-on-month rise in inflation which was mostly due to changes in energy tariffs and fuel prices. Also, we had some minor changes in food costs. Also, what we are seeing is in part put down to base effect which is when last year had very high prices so this year’s increase—which may in reality be for small scale items—still appears to be a large increase. This demonstrates how Pakistan’s Inflation is being shaped by complex and transitional forces.
Detailed Breakdown of CPI, SPI, and WPI Trends
CPI Urban And Rural Trends
In the years past, the Consumer Price Index (CPI) has seen a steady rise in urban and rural areas. In urban, we saw a year-over-year inflation of 3.5% in May 2025 which is a large jump from 0.5% in April. Also in rural, we saw the CPI increase to 3.4% as opposed to a drop of 0.1% in the prior month. What these results show is a general increase in what consumers pay at the market. Also, we saw this play out in the food and in the transport which in turn was a result of global supply chains’ changes and also our local currency values. The trend adds to the broader conversation surrounding Pakistan’s Inflation and its geographical spread.
Over the past month, we see price normalization which is a result of early 2025 deflationary trends. We also see that inflation is moving out of the city areas and into the rural, which means it is affecting a larger set of the population. The PBS data also puts forth the issue of rural inflation, which we must pay attention to, which in large part affects Pakistan’s low-income groups which in turn are very much tied into agriculture.
SPI And WPI Observations
In May 2025, the Sensitive Price Index (SPI) reported a drop of 0.6% year on year which is an improvement from the -3.6% we saw in April 2025. This drop, although a slow improvement, does indicate some relief in the short-term price of basic food and household items. This may be a result of stable supply chains and government intervention to keep prices of everyday goods down during the month of Ramadan and the post-Eid period. It contributes to a cautiously optimistic outlook for Pakistan’s Inflation.
The Wholesale Price Index (WPI) went up by 0.4% year on year, which is a turnaround from a report of a 2.2% drop we had the previous month. This small increase puts forth that we are seeing prices go up at the wholesale level in fuel, industrial inputs, and imported products. Also, we see that the rise in WPI is a sign of to-come retail price increases if manufacturers’ cost issues persist, which in turn may be a result of a weaker Pakistani rupee or increasing energy costs.
Monthly Comparison Table
| Inflation Watch | May 2024 | April 2025 | May 2025 |
|---|---|---|---|
| CPI Urban YoY | 14.3% | 0.5% | 3.5% |
| CPI Rural YoY | 8.2% | -0.1% | 3.4% |
| SPI YoY | 15.3% | -3.6% | -0.6% |
| WPI YoY | 9.9% | -2.2% | 0.4% |
This comparative look at the data shows that while inflation has dropped greatly in 2024, it is now on the rise again in 2025, highlighting the volatile nature of Pakistan’s Inflation.
Core Inflation Trends Show Moderate Decline
Core inflation as reported by the PBS—which strips out food and energy prices—saw a mixed picture. In May 2025, core inflation in urban areas fell to 7.3% year on year from 7.4% in April. In rural areas, it dropped to 8.8% from 9.0%. What we see is a stabilization of the base inflation, which is reported to be breaking out even as the overall inflation report indicates a recovery.
On a monthly basis, urban and rural NFNE inflation fell by 0.4%. This is a sign of reduced pressure from non-volatile items like healthcare, education, and housing. At the same time, the trimmed mean—which looks at persistent inflation trends—has increased, which puts up the risk of higher inflation. In urban areas, trimmed inflation went up to 4.9% from 3.8%, and in rural areas to 4.7% from 3.3%. These numbers point to a slow but steady rise in core price movements, contributing further insights into Pakistan’s Inflation patterns.
Bullet Points: Core Inflation (NFNE) Is Also Known As
- Urban YoY: 8.2% (from 7.4%)
- Rural YoY: 8.3% (down from 9.0%)
- MoM Urban: Minus 0.4%
- MoM Rural: Minus 0.4%
Bullet Points: Core Inflation Less Transitory Elements
- Urban YoY: 4.9% (up from 3.8%)
- Rural YoY: 4.6% (up from 3.3%)
These reports also show that while we have controlled the headline inflation, there is still a great deal of it at a base level, a sign that Pakistan’s Inflation could remain embedded longer than expected.
Implications For Economy And Consumers
Inflation reports for recent months tell a mixed story for Pakistan’s economy. We see that the 3.5% mark for the headline inflation is considered to be a healthy range, which in turn is a sign of some macroeconomic stability. At the same time, we also see a small rise from what we reported in April which may be the start of an upturn. Also, what we are seeing is mainly a result of last year’s high base which is largely a temporary factor and not as a result of very strong economic health.
Fuel prices, currency devaluation, and food imports are out of control which in turn is affecting inflation. The government has succeeded in setting prices of basic products via administrative means but we see an issue with increasing international oil prices and currency fluctuation. For the average person, core inflation is very much a reality. We see this play out in urban areas which also grapple with high housing, education, and healthcare costs. Many families are still in the process of trying to regain what they lost in terms of purchase power over the past two years.
Businesses are reporting to cut back on non-essential goods and also to source from local suppliers where they can. Consumers are turning more to discounts and basics as they buy less of luxury items. The State Bank of Pakistan may put out changes in interest rates in the coming months, which will depend on the inflation report—particularly should energy prices and core inflation continue to rise. In this economic climate, tracking Pakistan’s Inflation remains crucial for policy and investment decisions.
Conclusion
Pakistan has seen a stabilization in the inflation which May 2025 data reports a moderate improvement in. Although a 3.5% year on year increase is not to be worried about, it does put an end to what had been a downtrend we saw earlier this year. We see the return of inflation in both urban and rural areas, which also along with rising trimmed core indicators means that the risk of sustained price increases is still very much present.
As of now, we are seeing an improved economic environment, which at the same time requires us to be cautious. The government should keep a close watch on food and energy sectors and at the same time maintain stable policies to manage Pakistan’s Inflation.
