Pakistan’s core inflation eased significantly in August 2025, slowing to 3 percent from 4.1 percent in July. The decline highlights a notable shift in consumer price trends across both urban and rural regions, driven by reduced pressure on food and energy costs.
Core Inflation Sees Substantial Decline
According to official data, core inflation measured by the Consumer Price Index (CPI) fell to 3 percent in August compared to 9.6 percent in the same month last year. On a month-on-month basis, inflation decreased by 0.6 percent, contrasting sharply with a 2.9 percent rise recorded in July 2025.
This decline suggests that inflationary pressures have eased, especially compared to August 2024 when a 0.4 percent increase was reported.
Urban Inflation Trends
CPI inflation in urban areas rose by 3.4 percent on a year-on-year basis in August 2025. This was lower than the 4.4 percent increase observed in July and significantly below the 11.7 percent recorded in August 2024.
On a monthly basis, urban inflation decreased by 0.7 percent in August, following a 3.4 percent rise in the previous month. In comparison, August 2024 had shown a slight increase of 0.3 percent.
Rural Inflation Insights
In rural regions, CPI inflation increased by 2.4 percent on a year-on-year basis in August 2025. This reflects a slowdown compared to 3.5 percent in July and 6.7 percent in August 2024.
Month-on-month, rural inflation dropped by 0.5 percent, a stark contrast to the 2.2 percent rise in July. In August 2024, rural areas had recorded an increase of 0.6 percent.
Sensitive Price Indicator (SPI) Inflation
The Sensitive Price Indicator (SPI) showed a 2.6 percent increase in August 2025 on a year-on-year basis. This reversed the 0.9 percent decline seen in July, though it remains far lower than the 10.8 percent surge recorded in August 2024.
On a monthly basis, SPI inflation climbed by 3.2 percent in August 2025, slightly higher than the 3.1 percent rise in July. In contrast, August 2024 saw a 0.3 percent decline.
Wholesale Price Index (WPI) Movement
The Wholesale Price Index (WPI) declined by 1.0 percent year-on-year in August 2025. This marked a steeper drop than the 0.5 percent fall in July and a sharp reversal from the 6.3 percent increase seen in August 2024.
Month-on-month, WPI inflation slipped by 0.2 percent in August compared to a 1.2 percent rise in July. In August 2024, the index had shown a 0.3 percent increase.
Non-Food Non-Energy Core Inflation
Core inflation, excluding food and energy, presented mixed trends across urban and rural regions.
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Urban Areas: Core inflation increased by 6.9 percent year-on-year in August 2025, compared to 7.0 percent in July and 10.2 percent in August 2024. Month-on-month, urban core inflation rose by 0.3 percent, lower than the 0.8 percent rise in July 2025.
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Rural Areas: Core inflation climbed by 7.8 percent year-on-year in August 2025, compared to 8.1 percent in July and a much higher 14.4 percent in August 2024. On a monthly basis, rural core inflation rose by 0.2 percent, down from 0.7 percent in the previous month.
Broader Economic Outlook
The easing inflation in August 2025 points toward improved price stability. However, differences between rural and urban inflation patterns highlight challenges in managing economic pressures across regions. Analysts suggest that while overall inflationary trends have slowed, persistent risks remain due to global commodity fluctuations and domestic supply constraints.
The downward trend in both CPI and WPI may provide some relief to households and businesses, but sustained vigilance in monetary and fiscal policy will be critical to ensure long-term economic stability.
