Moaaz Manzoor

Pakistan experienced a moderate rise in inflation during October 2025, with price pressures emerging across key categories including food, education, transport and healthcare. The overall outlook suggests that inflation may remain elevated in the coming months due to persistent supply-side constraints and seasonal factors affecting food markets.

According to the Monthly Economic Update and Outlook for November 2025, the Consumer Price Index (CPI) increased to 6.2 percent year-on-year in October, up from 5.6 percent in September. On a month-on-month basis, prices rose by 1.8 percent, slightly lower than the 2 percent increase recorded in the previous month but still higher than the 1.2 percent rise observed in October 2024.

Education costs saw one of the sharpest increases, rising 10.6 percent year-on-year. This was followed by significant growth in prices of health services (9.7 percent) and clothing and footwear (8.1 percent). Transport charges also climbed by 6.7 percent, reflecting the impact of fluctuating fuel prices and higher domestic logistics costs.

Food inflation remained a key contributor, with non-perishable items rising 6.3 percent. Restaurants and hotels saw a 6.1 percent increase, while perishable food prices increased by 1.7 percent, reflecting the impact of weather disturbances and supply chain adjustments following earlier flooding in some regions. Meanwhile, the housing, water, electricity, gas and fuels category registered a 4.2 percent rise, indicating broader adjustments in utility costs.

The Sensitive Price Indicator (SPI), which tracks essential commodities for lower-income households, also edged up. For the week ending November 27, 2025, the SPI rose by 0.73 percent. Out of the 51 monitored items, prices of 14 increased, 12 decreased, and 25 remained stable, indicating a mixed pattern of price movements.

Looking ahead, the report notes that inflation for November is likely to remain within the 5 to 6 percent range, though pressures may intensify if food supply disruptions persist. Seasonal demand during the winter months, combined with global commodity volatility, may also influence domestic price trends.

The government maintains that supply-side measures, including improved market monitoring and targeted release of stocks for essential commodities, will help stabilise prices. However, structural issues, such as gaps in storage infrastructure, transport bottlenecks and climate-related shocks, continue to shape the inflationary landscape.

Monetary policy remains cautious. The State Bank of Pakistan has kept the policy rate unchanged at 11 percent, prioritising price stability amid mixed economic signals. Analysts believe that controlling food inflation will be essential for maintaining overall stability, especially as the agriculture sector faces a mixed crop outlook in the ongoing season.

Despite the uptick, Pakistan’s inflation remains relatively contained compared to last year’s levels, offering some relief to consumers and policymakers. Continued vigilance, however, will be necessary as global and domestic conditions evolve in the coming months.

Credit: INP-WealthPk