Consumer inflation slows to 9.2pc in July

Pakistan's consumer inflation, as measured by the Consumer Price Index (CPI), slowed to 9.2% in July from 11.07% the previous month, mainly due to reduced energy costs, according to data released by the Pakistan Bureau of Statistics. The modest decline for the second consecutive month indicates that the early July petrol and diesel price cuts helped ease household burdens.

However, the government has since implemented price hikes, which are expected to intensify overall inflationary pressures. In fiscal year 2026, the inflation rate was 7.05%, compared to 4.49% in fiscal year 2025. The government has set an inflation target of 8.2% for fiscal year 2027.

The slowdown in July inflation was mainly attributed to a 5.24% drop in transport costs, while transport charges increased by 15.08% compared to the same period last year. Gas and fuel charges also saw a minor decrease from the previous month. On the other hand, perishable food items saw a sharp 17.69% increase, underscoring the volatility in essential commodities. Non-perishable items, however, grew by 2.31% from the previous month, adding further stress to household budgets.

The State Bank of Pakistan (SBP) maintained its policy rate at 11.50% in its latest review, responding to rising oil prices following the renewed war in the Middle East. The data showed that urban inflation was slightly higher at 8.7% in July compared to 9.9% in rural areas on an annual basis. On a month-on-month basis, both urban and rural price levels increased by 1.2% and 3.7% and 3.4%, respectively.

Food inflation increased by 9.6% in urban areas and 10.2% in rural areas, while non-food inflation reached 8.2% in urban areas and 9.7% in rural regions. Core inflation, which excludes volatile food and energy components, stood at 8.6% in urban areas and 8.1% in rural areas.