Editorial
Pakistan’s inflation is rising again, and the numbers are hard to ignore. The headline inflation hit 10.9 percent in April 2026, the highest in 21 months, while core inflation climbed to an 13-month high of 8.2 percent. On a monthly basis, prices jumped 2.5 percent — driven mainly by fuel price hikes that pushed up transport costs and perishable food prices almost overnight.
But this is just the beginning. The full impact of fuel price increases takes time to work through the system. As that happens, headline inflation could easily reach 14 to 15 percent in May and June. Against this backdrop, the State Bank of Pakistan’s recent 100 basis point rate hike looks not just justified but necessary.
What makes this inflation wave particularly telling is where it hurts most — cities. Urban headline CPI rose 2.7 percent month-on-month against 2.1 percent in rural areas. The gap widens further in core inflation: urban prices up 1.9 percent versus just 1.1 percent in rural settings. The reason is simple. Cities sit farther from farms and fuel supply chains, so every price shock travels further and hits harder. Tomatoes in urban markets jumped 57 percent while rural areas saw 45 percent. Transport services in cities surged 28 percent against a mere 8 percent in rural areas.
Food inflation rose 1.8 percent in a single month, with perishables spiking 15.3 percent. Fresh milk, education costs, and vegetables are all climbing. And there is more to come — wheat supplies may fall short of target, pushing grain prices higher too.
The full-year average for FY26 is expected to land between 7 and 8 percent, slightly above the SBP’s medium-term comfort zone of 5 to 7 percent. The pressure is real, and ordinary Pakistanis are already feeling it.
