The Pakistan Bureau of Statistics (PBS) said on Tuesday that the consumer price inflation (CPI) rose 3.2% year-on-year in June, broadly in line with the Ministry of Finance's projection of 3% to 4% issued a day earlier.

On a month-on-month basis, prices increased 0.2% in June, reversing a 0.2% decline in May.

In a note, Topline Securities said that the full year inflation of 4.49% is also well within our expected range of FY25.

The pace of inflation, it said, has come down from an average of 23.41% in FY24 primarily on the back of deflation in housing, water, electricity, gas and fuels of 3.28% — thanks to the fall in electricity prices by 30% (Jun 2025 vs Jun 2024).

The brokerage said that in FY26, it expects inflation to average around 6-7%.

With inflation of 3.59% for June 2025, the real rate clocked in at 650bps, and for FY26 real rate is 400-500bps, significantly higher than Pakistan’s historic average of 200-300bps.

"Any major deviation in commodity prices from current levels may result in a change in inflation estimates," the note added.

The data comes after the State Bank of Pakistan (SBP) kept its key interest rate unchanged at 11% in June.

The central bank said in its latest monetary policy statement that inflation was expected to show some near-term volatility but gradually stabilise within the 5% to 7% target range.

The figures also come weeks after Pakistan unveiled its annual budget, which included new revenue measures and subsidy cuts as part of efforts to secure a long-term loan programme from the International Monetary Fund (IMF).

Analysts have warned that higher energy and tax costs could stoke inflation in the second half of the year.

Pakistan Stock Exchange rose 2.3% on the day to close at an all-time high of 128475.7 points, on Tuesday, the first day of the new fiscal year.