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Pakistan Inflation Cools to 3% in August, Flood Impact Looms
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September 1, 2025
Islamabad, Pakistan – Pakistan experienced a significant slowdown in inflation in August, with the Consumer Price Index (CPI) rising just 3% year-on-year, according to data released Monday by the Pakistan Bureau of Statistics (PBS). This marks a significant decrease from the 4.1% recorded in July and a dramatic drop from the 9.6% inflation rate observed in August 2024.
The easing of inflationary pressures comes as welcome news for the Pakistani economy, which has been grappling with double-digit inflation for much of the past year. On a month-on-month basis,the CPI decreased by 0.6% in August 2025, contrasting with a 2.9% increase in the previous month and a 0.4% increase in August 2024.
Finance Ministry Cites Macroeconomic Stability
Last week, the finance ministry projected August inflation would fall within the 4-5% range, attributing the positive trend to stable macroeconomic conditions and improvements in both manufacturing and agricultural support. Though, officials cautioned that extreme weather events pose a continuing risk to agricultural growth, despite increased access to agricultural credit and fertilizer supplies.
Punjab Floods Raise Concerns About Food Prices
Thes concerns have been amplified by recent devastating floods in the Punjab province. Authorities report that over 2.3 million people have been affected and at least 35 lives lost as heavy monsoon rains inundated more than 2,200 villages. Economists are warning that widespread crop damage resulting from the floods could quickly reverse the recent gains in controlling food inflation, which had begun to ease due to lower prices for perishable goods in August.
The potential for renewed inflationary pressure on food prices is a significant worry, particularly for vulnerable populations. The disruption to supply chains, as highlighted in reports from Dawn, could exacerbate the situation.
The coming months will be critical in assessing the full impact of the Punjab floods on Pakistan’s economy and its inflation trajectory.
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