Inflation soars to one-year high

ISLAMABAD: Inflation jumped to a one-year high in October, driven by soaring food prices after floods and border disruptions choked supplies, underscoring renewed price pressures that could complicate the central bank’s cautious policy stance.

Headline inflation measured by consumer price index (CPI) rose 6.2 per cent in October 2025 from a year earlier, up from 5.6 per cent in September, as food prices surged 5.6 per cent — the fastest pace since April 2024. Perishable items led the climb, with tomato prices skyrocketing 127 per cent, sugar up 34.8 per cent, wheat 22.6 per cent and wheat flour 15.7 per cent.

The supply shocks, triggered by flood-damaged farmlands and the closure of the Afghan border following clashes, squeezed agricultural trade routes and cause some food items shortages, spilling inflationary pressure across other sectors.

Price pressures spread beyond food, with housing and utilities inflation quickening to 4.2 per cent from 3.7 per cent and transport costs jumping to 6.7 per cent from 4.2 per cent. Clothing and footwear edged up to 8.1 per cent, while miscellaneous goods and services surged to 18.2 per cent from 14.9 per cent.

Inflation held steady for restaurants and hotels at 6.1 per cent and eased slightly for household furnishings to 4.0 per cent. Recreation and culture prices, however, extended their decline, falling 3.7 per cent. On a monthly basis, consumer prices rose 1.8 per cent, driven by a sharp 14.9 per cent spike in perishable food costs.

Notably, on October 27, the State Bank of Pakistan kept its key interest rate unchanged at 11 per cent for the fourth meeting in a row, taking a cautious approach as it faces rising inflation and a weak economic recovery. The central bank is holding off on further cuts, worried that supply problems and higher food prices could push inflation up again.

Core inflation — which excludes volatile food and energy prices — also picked up pace. Urban core inflation climbed to 7.5 per cent year-on-year from 7.0 per cent in September, and 8.6 per cent in October 2024, while rural core inflation advanced to 8.4 per cent from 7.8 per cent, and 11.7 per cent in October 2024, highlighting persistent underlying price pressures.

Urban inflation stood at 6.0 per cent, while rural areas saw 6.6 per cent inflation, from 9.3 per cent and 4.2 per cent, respectively, in the same month last year.The Wholesale Price Index (WPI) increased 1.1 per cent in October, as compared to an increase of 0.6 per cent in previous month and 3.9 per cent in same month of last year.