Editorial
After one of the most dramatic economic recoveries in recent memory, Pakistan’s inflation is reversing course. Optimus Capital Management projects headline inflation will rise to 7.4% year-on-year in February 2026, up sharply from 5.8% in January. The culprits are familiar: electricity tariff adjustments and rising gold prices. The warning is clear. The easy gains are over.
To understand the gravity of this shift, consider where Pakistan has come from. In May 2023, inflation hit a staggering 38%, devastating household budgets and eroding the purchasing power of millions. That peak was followed by a prolonged and painful correction, with inflation finally falling to a historic low of 0.3% in April 2025. It was a moment of fragile relief. It did not last.
Since that low point, the cost of living has been climbing steadily. February’s projected 7.4% is not merely a number. It marks, as Optimus Capital notes, the beginning of a base effect-driven acceleration phase. Core inflation is expected to edge higher to 7.9%, reversing recent gains. By June 2026, headline inflation could approach 9 to 10% if base effects and seasonal pressures align as forecast. March 2026 is expected to deliver the sharpest monthly increase, driven by Ramadan demand, rising crude oil prices amid geopolitical tensions, and positive FCA electricity charges.
There are offsets. PKR stability holds, and global oil prices remain relatively contained. Optimus Capital estimates FY26 average inflation at 6.7%, technically within the State Bank’s 5 to 7% target. But averages can be deceptive. What ordinary Pakistanis experience is not an average. They experience the price of flour, electricity, and cooking oil each morning.
The direction of travel is upward. That is the only number that matters to a household already stretched thin.
