Pakistan Economy: Aug’25 CPI likely to clock in at 4.1% - By Insight Research
Aug 29 2025
Insight Securities
- Headline inflation is estimated at ~4.1% for Aug’25, compared to ~9.6% in SPLY and ~4.1% in preceding month. On MoM basis, inflation is expected to inch up by ~0.4%, amid increase in prices of food items the impact of which has been negated by lower electricity charges and decline in LPG price.
- Within the SPI basket, items that recorded significant increase in prices during the period are as follows, Tomato (38.8↑%), Onions (21.5↑%), Eggs (9.9%↑), Fresh vegetables (4.0%↑) & Wheat (4.0%↑). On the flip side, prices of the following items eased off during the month, Fresh fruits (9.9%↓), LPG (9.8%↓), Potato (5.1%↓), Pulse moong (4.6%↓) & Sugar (4.1%↓).
- We anticipate that the SBP will keep the policy rate unchanged in upcoming MPC, as the full impact of cumulative 1,100bps reduction in policy rate is still unfolding. The real sector remains in recovery mode following the strain of elevated inflation and sharp currency depreciation, both of which eroded purchasing power of masses. Furthermore, central bank’s tone in the last MPC suggested a pause for now, which will provide clarity to the market and encourage credit offtake in the coming months, given that no immediate cut in borrowing costs is expected. Hence, it appears prudent to maintain the policy rate at its current level and wait for the steep decline in interest rates to translate into real economic activity.