Inflation stood at 3.2% in June last year.

On a month-on-month basis, the consumer price index (CPI) fell 0.3% in June, reversing a 0.5% rise in May. In June 2025, month-on-month inflation rose 0.2%.

For fiscal year 2025-26 overall, inflation averaged 7.05%, sharply higher than the 4.49% recorded in FY25.

“The YoY uptick in inflation has largely been driven by increases in energy and transportation costs due to rising oil prices amid ongoing geopolitical tensions,” Arif Habib Limited (AHL) said in a note.

Urban, rural trends diverge

Urban CPI inflation rose 11.2% year-on-year in June, down from 11.8% in May and well above the 3.0% recorded in June 2025. Month-on-month, urban inflation fell 0.5%, compared with a 0.7% rise in May.

Rural CPI inflation climbed 10.9% year-on-year, down from 11.5% in May and 3.6% in June 2025. On a month-on-month basis, rural inflation was unchanged, after a 0.3% increase in May.

Government sees relief ahead

The Ministry of Finance, in its latest monthly outlook, said easing geopolitical tensions amid ongoing Middle East peace efforts have improved global market sentiment and pulled international crude prices back from recent highs. This is expected to reduce imported inflationary pressures and ease domestic fuel and transport costs.

“Inflation is anticipated to remain within the range of 11-12% for June 2026,” the ministry said, adding that lower oil prices should also support the external account by containing the import bill.

The State Bank of Pakistan’s Monetary Policy Committee kept the policy rate unchanged at 11.5% last month. Inflation is expected to stay in double digits for the next few months before gradually easing.