ISLAMABAD: Pakistan’s headline inflation slowed to 3.23 per cent year-on-year in June 2025, as food, utilities and essential consumer prices dropped sharply, official data showed Tuesday. The annual average inflation for FY2024-25 clocked in at 4.49pc.
This marks the eleventh consecutive month that inflation has remained in single digits, strengthening expectations for a further policy rate cut by the State Bank of Pakistan (SBP), whose benchmark rate is still at 11 percent, down from a record 22pc last year. The easing trend was led by a slowdown in food inflation, which fell to 2.56pc in June from 3.07pc in May. Perishable food prices remained in deflation, though the pace of decline narrowed to -10.55pc from -9.2pc a month earlier.
Core inflation—which excludes volatile food and energy prices—also dropped to 6.9pc in June from 7.3pc in May and was significantly lower than the 12.2pc recorded in June 2024. Month-on-month, core prices slipped 0.2pc, keeping the real interest rate at an unusually high 7.77pc—among the highest globally.
Urban inflation stood at 3.0pc, while rural areas saw 3.6pc inflation, a sharp improvement from 14.9pc and 9.3pc, respectively, in the same month last year, the Pakistan Bureau of Statistics (PBS) reported. The figures aligned with projections from the Finance Ministry and private sector analysts. The ministry had expected June inflation to fall within the 3-4pc range, while brokerage house JS Global had forecast a 3.1pc CPI print.
Economists say the continued moderation in prices could prompt the SBP to cut its policy rate again, offering relief to businesses and boosting investment in a cash-strapped economy facing tight fiscal constraints and heavy debt repayments. The halving of the policy rate over the past year has already saved the government over Rs1 trillion in debt servicing.
Most major consumer sectors reported cooling inflation in June. Health inflation dipped to 12.15pc from 12.75pc, while education stayed steady at 10.1pc. Clothing and footwear inflation eased to 8.95pc from 9.66pc, tobacco and alcohol to 5.1pc from 7.9pc, and recreation and culture even entered deflation at -1.04pc. Housing and utilities costs slid -2.5pc in June after a -2.6pc drop in May. However, transportation turned inflationary again, rising 0.61pc from -2.5pc.
The Wholesale Price Index (WPI) declined 0.6pc in June, continuing a downward trend from May’s 0.4pc drop. WPI was up 10.6pc in June 2024. Some kitchen staples saw notable monthly increases: tomato prices surged 57.3pc, potatoes 25.7pc, onions 15.3pc, and eggs 8.8pc. Prices of rice, flour, sugar, and fruits also ticked higher. But there was respite elsewhere—chicken prices dropped by 35pc, and fresh vegetables by 1.6pc.
In another development, Chairman FBR Rashid Mahmood Langrial told Aaj Shahzeb Khanzada, there will be a change in the tax culture this year, and an immediate action will be taken against an officer against whom a complaint is received. The most important message of the government and the FBR is that we will not allow any kind of abuse.
The current authority was with the ACDC. “We delved into four more safeguards. We said that this authority will not be with the EC, DC, Commissioner or Chief Commissioner. All these people will make a case and send it to a three-member committee which will consist of a board member. They will write an order.
Highlighting performance of last year, he said the FBR revenue to GDP ratio has increased to 10.2 percent during the fiscal year 2024-25, significantly higher than last ten years. Last year, in June it was just 8.8. He said the country needs to enhance tax to GDP ratio to ensure sustainable economic growth.
Earlier, Minister of State for Finance Bilal Azhar Kiyani said that the government would aim to achieve export led growth and would strive to jack up foreign exchange reserves to reduce reliance on IMF. Addressing a conference along with Chairman FBR Rashid Mahmood Langrial here, the Minister of State on Finance said inflation receded in the last fiscal year and was expected that it would remain hovering in the single digit.
The Minister of State for Finance said that the effective fiscal and monetary policies introduced by the incumbent coalition government had resulted in positive performance of various economic indicators and put the economy on sustainable growth path. He said the headline inflation dropped to 4.5 percent from 28 percent when the current government took office in 2024. He said the policies helped stabilize macroeconomic fundamentals without resorting to supplementary or mini-budgets, “We outperformed our own expectations,” he said, adding that the policy rate was also reduced from 22 percent to 11 percent during the same period.
The government also posted a current account surplus of $8 billion, while foreign exchange reserves climbed to $14 billion by June 20, 2025 — levels not seen in recent years. The minister acknowledged that declining reserves had historically been the country’s biggest economic vulnerability and one of the primary reasons for repeated IMF engagements. However, he asserted that improved trade balances and reduced reliance on imports had helped reverse this trend. He said the Federal Board of Revenue (FBR) recorded an impressive 26% growth in revenue collection during the fiscal year.
Regarding the recently passed federal budget, the minister credited both houses of parliament for their constructive role and cross-party support during lengthy legislative processes. He said the budget was focused on consolidating macroeconomic stability while pivoting toward export-led and sustainable growth. The PM’s vision, he added, is to build an economy that earns more foreign exchange, reduces external vulnerabilities and creates inclusive prosperity.
Speaking on the occasion, Chairman Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial said that taxpayers are the most important stakeholders in Pakistan’s revenue system, and the government was committed to rebuilding trust between the tax machinery and the people.
Langrial emphasized that tax compliance must be based on facilitation, fairness and transparency— not intimidation or coercion. “Anyone who pays their taxes honestly is a crown jewel for the FBR and for the nation. They are the reason this system functions,” he said, adding FBR has undergone substantial internal reforms over the past year aimed at changing institutional behavior and making the organization more service-oriented.
He said offices of FBR officer would remain open for facilitation of taxpayers. The chairman strongly rejected any use of pressure tactics in tax collection, making it clear that the FBR’s mandate is not to extract more than what is legally due. “Our officers are not expected to collect more money—they are expected to collect the right amount. That is the principle we are working with,” Langrial stressed. He further said that the FBR is working toward a culture of mutual respect and partnership with the taxpayer, asserting that enforcement will be used judiciously and only when required to ensure compliance. Highlighting performance of last year, he said the FBR revenue to GDP ratio has increase to 10.2 percent during the fiscal year 2024-25, significantly higher than last ten years. Last year, in June it was just 8.8. He said the country needs to enhance tax to GDP ratio to ensure sustainable economic growth.