June headline inflation was 12.6% annually, according to figures released on Monday by the Pakistan Bureau of Statistics (PBS).
Although the measure is higher than the 11.8 percent year-over-year increase in May, it is still far below than the 23.4 percent average for the fiscal year that concluded on June 30.
The Consumer Price Index (CPI), which is a monthly measure of consumer inflation based on a basket of goods and services, increased by 0.5 percent in June.
The State Bank of Pakistan and the Finance Ministry both predicted an increase in June’s CPI estimate because of spending associated with the Eidul Azha vacation.
The index has slowed since reaching a record high of 38 percent in May 2023, which has helped an economy struggling with high prices and poor growth.
The primary interest rate was lowered from a record high of 22 percent points by the central bank last month by 150 basis points, the first decrease in almost four years.
In light of declining inflation, Finance Minister Muhammad Aurangzeb has stated he anticipates more cutbacks this year.
Rate reductions are essential if the government is to limit its budget deficit to 5.9 percent of GDP, a large portion of which is made up of interest on local debt. Talks over a bailout with the International Monetary Fund (IMF) heavily revolve around fiscal tightening.
After passing a tax-heavy budget on Friday, the government is pushing for a long-term bailout of between $6 and $8 billion, saying it wants a deal this month.
But the State Bank also cautioned against a spike in inflation above and beyond the seasonal increase in its monetary policy statement last month, citing anticipated tax increases in the yearly budget.
