Pakistan Annual Inflation Eases in July

The annual inflation rate in Pakistan eased to 9.2% in July 2026, from 11.1% in the previous month, remaining well above the State Bank of Pakistan's 5%-7% target range. The slowdown was mainly driven by softer inflation for housing and utilities (7.1% vs 15.5%) and transport (15.1% vs 25.7%), while clothing and footwear inflation edged lower (9.2% vs 9.3%). In contrast, food inflation accelerated to 10.6% from 9.4%, as prices of non-perishable food items remained elevated (11.6% vs 10.2%). Additional upward pressure came from restaurants and hotels (5.7% vs 5.4%), education (9.0% vs 8.3%), health (7.8% vs 7.6%), and communication, where inflation surged to 13.6% from 0.9%. On a monthly basis, consumer prices rose 1.2% in July, rebounding from a 0.3% decline in June.

Pakistan's annual inflation rate eased to 11.0% in June 2026 from a two-year high of 11.7% in May, and in line with the government's forecast range of 11%-12%. The slowdown was mainly due to housing and utilities (15.5% vs. 16.1%), while inflation fell sharply for transport (25.7% vs. 39.5%). In contrast, food inflation accelerated to 9.4% from 6.8%, reaching its highest level since April 2024. Although geopolitical tensions have eased, Pakistan remains highly dependent on imported energy, with policymakers expecting energy prices to stay elevated in the near term. On a monthly basis, consumer prices fell 0.3% in June, reversing a 0.5% increase in the previous month.

The inflation rate in Pakistan jumped 11.7% year-on-year in May 2026 from 10.9% in April, remaining well above the State Bank of Pakistan's 5%-7% target range and marking the highest reading since June 2024. Price pressures intensified across several categories, including food and non-alcoholic beverages (7.9% vs. 7.6%), alcoholic beverages and tobacco (2.3% vs. 2.0%), clothing and footwear (8.8% vs. 6.2%), furnishing and household equipment (5.1% vs. 3.8%), and transportation (36.8% vs. 29.9%). Meanwhile, inflation for housing and utilities remained elevated at 16.8%. The increase largely reflects higher energy costs following the Middle East conflict, with petrol and diesel prices still about 48% and 38% above their pre-war levels, respectively. On a monthly basis, consumer prices grew 0.5% in May, easing from a 2.5% rise in the preceding period.