ISLAMABAD— Pakistan’s inflation dropped to one of its lowest levels in years this August, with consumer prices rising just 3 percent compared to last year.
The government’s latest Monthly Economic Update & Outlook says this is good news for the economy.
But it also warns that the relief isn’t reaching everyone, as education and health costs keep climbing sharply, putting more pressure on families.
Prices Drop—But Not Everywhere
According to the Finance Division, average inflation in July–August 2025–26 stood at 3.5 percent, down from a steep 10.4 percent during the same months last year.
In August alone, inflation cooled to 3.0 percent, compared to 4.1 percent in July and a much higher 9.6 percent in August 2024. On a month-to-month basis, prices even fell by 0.6 percent, reversing the big 2.9 percent jump in July.
The biggest relief came from perishable foods, which dropped by a massive 21.6 percent year-on-year. Recreation and cultural activities also became a bit cheaper, falling by 2.3 percent.
The Hidden Burden
But not all categories saw relief. The cost of education surged 10.9 percent, health care rose 10.6 percent, and clothing and footwear jumped 8.1 percent. Even everyday spending at restaurants and hotels went up 7.2 percent. Meanwhile, housing, utilities, and fuel increased 3.6 percent, while transport rose 2.5 percent.
The Sensitive Price Indicator (SPI), which tracks 51 key items, showed that in the week ending September 25, prices of 17 items rose, 11 dropped, and 23 stayed the same.
Economists Sound the Alarm
While the government sees falling inflation as a sign of stability, experts caution that double-digit growth in essential services like health and education is eating into family budgets.
“If schools and hospitals keep raising prices this fast, most households won’t feel the benefit of lower inflation elsewhere,” economists warn.
The report also noted that flood-related supply chain disruptions could temporarily push prices up again.
Still, it expects overall inflation to stay in the 3.5 to 4.5 percent range in September 2025.
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