Pakistan’s inflation is expected to accelerate in July, driven primarily by higher food prices and uncertainty in global energy markets, prompting continued caution ahead of the central bank’s next interest rate decision.
Market estimates from Growth Securities and JS Global project Consumer Price Index (CPI) inflation at 9.1% year-on-year for July. Growth Securities also forecasts a 1.1% month-on-month increase.
If realised, the reading would be higher than the 4.1% recorded in July 2025 and above the government’s projected FY2026-27 average inflation rate of 8.2%.
According to Nasheed Malik of Growth Securities, the expected monthly increase is largely attributable to rising food prices, particularly tomatoes, potatoes, chicken and onions, reflecting seasonal supply pressures.
The food index is projected to increase by around 1.4% month-on-month.
Lower fuel prices are expected to provide some relief. Average petrol prices fell 17.7% during the month to Rs312.53 per litre, while high-speed diesel (HSD) prices declined 14.9% to Rs325.06 per litre. The decrease is expected to reduce the transport index by around 0.8%, while LPG prices also fell 13.3%.
Growth Securities, citing State Bank of Pakistan (SBP) data, said month-on-month inflation has remained elevated in recent months, indicating persistent underlying price pressures despite moderation in annual inflation.
Meanwhile, JS Global warned that renewed geopolitical tensions in the Middle East could increase imported energy costs and add further pressure to Pakistan’s inflation outlook.
The brokerage expects transport inflation to rise 21% year-on-year in July, while food inflation is also projected at 9.1%.
JS Global added that a prolonged period of instability in the Middle East could temporarily push inflation higher before easing as regional tensions subside.