Consumer price index (CPI) inflation slowed to three per cent year-on-year in August from 4.1pc in July, data from the Pakistan Bureau of Statistics (PBS) showed on Monday, though economists warned that weeks of flooding in Punjab could put food prices under renewed pressure.

According to the data, CPI-based inflation during the same month of last year (August 2024) was recorded at 9.6pc.

On a month-on-month basis, it decreased by 0.6pc in August 2025 as compared to an increase of 2.9pc in the previous month and an increase of 0.4pc in August 2024.

The finance ministry last week projected August inflation in a 4-5pc range — down from double-digit annual readings through much of last year — citing stable macroeconomic conditions, improved manufacturing and agricultural support.

But the ministry warned that extreme weather posed a threat to farm sector growth, even at a time of improved agricultural credit and fertiliser supplies.

Authorities in Punjab said more than 2.3 million people were affected and 35 were killed in the floods that swamped more than 2,200 villages after heavy monsoon rains.

Economists say widespread crop damage could quickly feed into higher food inflation, which had eased in August on account of lower perishable prices.