June inflation likely to ease to 3.1%: report

KARACHI: Inflation is projected to ease sharply to 3.1 per cent year-on-year (YoY) in June 2025, signalling a return to more stable price trends as high base effects from last year dissipate, according to brokerage JS Global.

The brokerage expects full-year average inflation for FY2024-25 to decline to 4.6 per cent, a substantial drop from 23.9 per cent recorded in the previous fiscal year. Food inflation for June is likely to register at 2.8 per cent YoY, compared to just 0.97 per cent a year earlier. However, falling prices in certain food categories may push month-on-month (MoM) food inflation into negative territory. Housing, gas and electricity costs are projected to fall 4.1 per cent YoY, driven by reductions in electricity tariffs.

Core inflation -- which excludes volatile food and energy prices -- is expected to remain sticky at 8.5 per cent YoY. Urban core inflation stood at 7.3 per cent in May, while rural core inflation was recorded at 8.8 per cent, the report added.

The State Bank of Pakistan (SBP) maintained its policy rate at 11 per cent in its most recent Monetary Policy Committee (MPC) meeting, after slashing rates by a cumulative 1,100 basis points over the past year. The central bank cited rising import demand and geopolitical risks in the Middle East as key uncertainties clouding the inflation outlook.

JS Global forecasts average inflation for FY2025-26 to edge up slightly to 5.9 per cent. The next MPC meeting is expected in late July.The June inflation breakdown shows mixed sectoral trends: health and education categories remain elevated, with YoY inflation at 11.7 per cent and 10.4 per cent, respectively, while transport and recreation costs declined.