Pakistan’s CPI seen returning to double digits in August as food, fuel costs surge

Pakistan's headline inflation is set to rise back into double digits in August, primarily due to surging food and transport costs, according to various financial analysts. Inflation is forecast to sit between 10.75%-11.3% year-on-year in August, marking a significant increase from the 9.21% recorded in July, as per estimates from Ismail Iqbal Securities, Topline Securities, and JS Global.

This surge reflects both higher prices and unfavorable base effects, with Pakistan's inflation rate standing at 9.2% year-on-year in July 2026, as per data from the Pakistan Bureau of Statistics. On a month-to-month basis, analysts predict a 1.2% increase, with Topline Securities projecting 1.06%.

A major driver of this inflationary surge is the food inflation, which is expected to climb by 1.82% month-on-month, primarily spurred by higher prices of onions (+48%), eggs (+10%), pulse gram (+7%), and wheat (+6%). Similarly, Ismail Iqbal Securities estimates that food costs will account for approximately 70 basis points of the monthly Consumer Price Index (CPI) increase, citing the aforementioned factors. However, Ismail Iqbal Securities anticipates these food price concerns will subside as supply chains normalize.

Transport costs are also expected to contribute substantially to the inflationary pressure. A 20 basis points increase is forecasted, driven by a 7% rise in motor fuel prices. Furthermore, Topline Securities estimates that higher international oil prices and increased dealer margins will push transport costs up. The weighted-average calculation of fuel prices, based on the last day of the month, allows for a projected contribution of around 5% to the transport index increase.

Furthermore, JS Global anticipates Pakistan's CPI to reach 10.9% in August, citing renewed geopolitical tensions and disruptions to critical energy trade routes that have heightened global uncertainty. This has led to a more cautious stance by the State Bank of Pakistan (SBP), with the central bank keeping the policy rate unchanged at 11.50% in its last meeting.

JS Global notes that external risks outweigh the case for further rate cuts, and under an alternative scenario of prolonged geopolitical tensions in the Middle East, higher imported energy costs could temporarily push Pakistan's inflation trajectory to 9%, before settling around 8%.