Islamabad — Pakistan’s headline Consumer Price Index (CPI) inflation rose sharply to 5.6% year-on-year in September 2025, up from 3.0% in August, driven largely by rising food prices and supply chain disruptions caused by recent floods.

Some key details:

• The urban inflation rate stood at 5.5% YoY, while rural inflation was slightly higher at 5.8% YoY.
• Month-to-month (MoM), the CPI increased by about 2.0%, reversing the negative or flat trends seen in past months.
• Non-food inflation also contributed significantly, with energy, transportation, and household goods showing noticeable increases. Meanwhile, perishable food items saw mixed movement due to local supply issues.
• Analysts warn that continued flood-induced disruptions to agriculture and transportation may keep upward pressure on prices, especially for staple foods.

Why it matters:

• Such a jump in inflation strains household budgets, especially for low-income consumers who spend a larger share on food.
• It complicates monetary policy decisions—whether to tighten or hold interest rates constant—as inflation rises.
• It impacts investor confidence and can slow down economic recovery unless checked by stabilization measures.

Outlook:

• The Ministry of Finance had forecasted inflation for September to remain between 3.5-4.5%, but results exceeded expectations.
• Policymakers are likely to monitor food supply channels, imports of essential items, and flood recovery closely. Steps like subsidies, import facilitation, and improved logistics may be part of relief efforts.