Pakistan’s Inflation Likely to Hit Highest Level in Nearly 2 Years

Pakistan’s inflation rate is expected to rise further in May 2026, with estimates suggesting the Consumer Price Index (CPI) could reach between 11.0 percent and 11.5 percent year-on-year. If confirmed, this would mark the highest inflation level recorded in nearly two years.

The projected increase follows an inflation rate of 10.89 percent in April 2026, while the figure stood at 3.46 percent during the same month last year.

On a monthly basis, inflation is expected to increase slightly by 0.07 percent, mainly due to rising food prices.

According to estimates, food inflation is being driven by higher prices of essential items including wheat flour, wheat, and potatoes. However, some relief was seen in vegetable prices, with tomatoes and onions recording noticeable declines during the month.

The transport sector showed a mixed trend. Petrol prices recorded an increase, while high-speed diesel prices declined compared to previous levels.

Meanwhile, the Housing, Water, Electricity, and Gas category is expected to witness a slight decrease in May 2026. The decline is mainly linked to lower electricity charges and reduced prices of liquefied petroleum gas (LPG).

Electricity costs reportedly eased due to adjustments in fuel charges and quarterly tariff revisions.

Analysts believe that with inflation remaining above 11 percent, real interest rates may stay below Pakistan’s long-term average levels.

Research estimates suggest average inflation for fiscal year 2026 could settle around 7.1 percent, while inflation for fiscal year 2027 is projected at approximately 8.2 percent.