Annual urban headline inflation eased to 14.9% in June 2025, compared to 16.8% in May 2025, reflecting easing inflationary pressures from food items, despite an increase in the cost of piped natural gas services. Inflation dynamics in June remained relatively contained, supported by declining food prices, while retail and services inflation followed their typical seasonal patterns without significant deviations.
Similarly, annual core inflation dropped to 11.4% in June 2025 from 13.1% in May, reflecting subdued monthly core dynamics. Monthly core inflation registered -0.2% in June 2025, compared to 1.3% in June 2024 and 1.6% in May 2025. This marks the first monthly core deflation since July 2024, largely driven by a notable decrease in core food prices, especially poultry, alongside modest declines in fresh fruit and vegetable prices in line with seasonal harvest patterns. These food price declines helped offset mild increases in non-food inflation.
Monthly urban headline inflation stood at -0.1% in June 2025, down sharply from 1.6% in June 2024 and 1.9% in May 2025. This -reading mainly reflected the drop in core food and fresh produce prices, which outweighed increases in price-regulated items and services.
Annual rural headline inflation also receded to 13.9% in June 2025, compared to 16.2% in May, while annual nationwide headline inflation fell to 14.4% in June from 16.5% in May. Monthly food inflation declined by 1.2% in June, as anticipated by CBE’s nowcasts, contributing -0.47% to monthly headline inflation.
The decline in food inflation was driven by several factors. Prices of fresh fruits and vegetables fell by 2.3% and 1.3% respectively, together contributing -0.11% to monthly headline inflation. Poultry prices dropped sharply by 9.1%, broadly in line with seasonal trends, contributing -0.51%. In contrast, prices of dairy products rose by 0.6%, adding 0.03%, while higher prices of red meat, fish and seafood contributed an additional 0.08%. Remaining core food items, including eggs, fats and oils, added 0.05% to the monthly figure.
Prices of regulated items increased by 0.6%, contributing 0.12% to monthly headline inflation, mainly driven by a 33% hike in natural piped gas service charges. Service prices rose by 0.5%, contributing 0.14%, largely due to higher spending on restaurants, cafes, and rising rental costs. Retail item prices also increased by 0.6%, adding 0.09 percentage point, driven by a 5.7% rise in engine oil prices along with moderate increases in clothing, footwear, and gold prices.
Monthly core inflation’s -0.2% reading in June 2025 reflects these shifts in core CPI items. While services and retail items contributed positively by 0.19% and 0.12% respectively, core food prices made a significant negative contribution of 0.49%.
