After inching up to 3% year-on-year (YoY) in August, Pakistan’s headline inflation is expected to rise sharply, clocking in at 6.5-% in September amid flood-induced food price hikes, as per a report by brokerage house Topline Securities on Wednesday.
“Pakistan’s Consumer Price Index (CPI) for September 2025 is expected to clock in at 6.5–7% YoY vs. 3% in August 2025 and 6.93% in September 2024. On a month-on-month (MoM) basis, inflation for September 2025 is projected at +3.1%,” read the report.
Topline noted that YoY inflation reading is likely to be the highest after 11 months, while the 3.1% MoM rise is the highest in 26 months. The MoM increase was driven by an expected rise of 8.75% in the food segment, likely to be an all-time high MoM increase.
“The resurgence in food inflation is primarily on the back of supply-side effects on food products due to ongoing floods in the country,” it added.
Pakistan is currently experiencing severe flooding as part of an extended monsoon season that began in late June 2025 and has intensified through September. The disaster has primarily affected densely populated regions, especially in Punjab.
Days ago, the Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) decided to keep the policy rate unchanged at 11%, citing the adverse impact of recent floods on the near-term macroeconomic outlook.
Key contributors to the monthly inflation are tomatoes (+122%), wheat (+49%), wheat flour (+39%), and onions (+35%). Meanwhile, potatoes rose 5.4%, rice 4.3%, chicken 4.1%, eggs 3.5%, and sugar 2.7%. However, fruits are likely to remain flattish, while vegetable prices would be down by ~10% MoM.
Meanwhile, “the housing, water, electricity, and gas category is expected to fall by 0.24% MoM in September due to a 2.19% MoM decline in electricity charges – Quarterly Tariff Adjustment (QTA) of Rs1.8881/kWh for August–October and Fuel Charges Adjustment (FCA) of Rs-1.7856/kWh (vs. Re0.7772/kWh in August 2025). The decline in electricity was partly offset by a 2.75% rise in Liquefied Petroleum Gas (LPG),” read the report.
The brokerage house shared that with inflation expectations of 6.5-7.0% for September 2025, real rates will surge to 400-450bps [basis points], higher than Pakistan’s historic average of 200-300bps.
Moreover, a significant shift in global commodity prices remains “a major variable” that could alter the inflation trajectory moving forward, warned Topline.
