ISLAMABAD: The year-on-year consumer inflation rate in May was the highest since December, indicating a rebound in inflation after months of slowdown.

According to data released by the Pakistan Bureau of Statistics on Monday, the Consumer Price Index (CPI) inflation stood at 3.46 per cent in May 2025 as compared to the previous year.This was the highest reading since Dec when it was 4.07pc. In the following four months, the CPIwas 2.41pc, 1.52pc, 0.69pc and 0.28, respectively.

The month-on-month CPI in May was down 0.17pc compared to April.

The CPI calculates the increase ordecreaseinthe prices of 356consumer items and services in 35 cities and villages.

These items include perishable food items, fuel, electricity, and services like healthcare, education,postalservices,etc.

Over the past three years, Pakistan has recorded historic inflation, forcing the government to raise interest rates to rein in prices.

The rising inflation eroded people`s purchasing power as their wages didn`t increase proportionately to offset the impact of higher cost of living.

It also made lending from banks costlier as the State Bank raised interest rates to cool down the economy.

The CPI inflation surged over 10pc in November 2021 and remained in double digits for 33 consecutive months until July 2024.

However, since last year, prices have begun to subside, primarily due to lower global commodity prices, stable exchange rates, and improved agricultural outputs.

In August 2024, CPI dropped to 9.6pc, marking the first single-digit figure in over three years, and the downward trend continued in the following months.In the first 11 months (JulyMay) of FY25, the average inflation was 4.61pc compared to 24.52pc during the same period last year.

Exceeding expectations The May inflation rate increase even exceeded the Ministry of Finance`s expectation, which had projected it to remain between 1.5pc and 2pc.

In its report, the ministry projected the figure would rise to between 3pc and 4pc in June.

The upward trend in inflation was primarily driven by higher prices of chicken, sugar, pulses, edible oil, meat, and beverages.

In May, urban inflation stood at 3.5pc year-on-year, while rural inflation was recorded at 3.4pc.

Food inflation for May was 5.3pc in urban areas and 2.1pc in rural areas, whereas nonfood inflation was 2.4pc in urban areas and 4.6pc in rural areas.

The prices rebounded after a decline in four consecutive months.The core inflation, which excludes volatile food and energy prices, was recorded at 7.3pc in urban areas and 8.8pc in rural areas in May.

The items whose prices increased the most year-onyear in urban areas were chicken (51.96pc), pulse moong (31.13pc), fruits (29.5pc), butter (26.15pc), milk powder (21.80pc), sugar (21.71pc), honey (21.23pc), condiments and spices (19.98pc), pulse gram (18.25pc), besan (17.84pc), ghee (12.75pc), meat (11.77pc) and fresh milk (10.68pc).

The items whose prices decreased were onions (54.46pc), tomatoes (32.16pc), potatoes (23.9pc), wheat (23.79pc), wheat flour (23.01pc), pulse mash (18.69pc) and tea (17.75pc).

Non-food items whose prices went up were motor vehicle tax (168.79pc), personal effects (33.24pc), electrical appliances (17.63pc), water (14.84pc), hosiery (14.41pc), household textiles (14.30pc), medicines (14.04pc) and medical tests (13.56pc).