Pakistan’s inflation expected to hit 18-month high of 7.4% in February: report

Pakistan’s headline inflation is expected to increase to 7.4% year-on-year in February 2026, up from 5.8% in January, according to a report issued by Optimus Capital Management.

The brokerage estimates a 0.7% month-on-month rise in the National Consumer Price Index for February, marking the highest annual reading in around 18 months. It attributed the uptick to electricity tariff adjustments and higher gold prices, alongside base effects.

The report noted that food prices are likely to decline by 0.4% on a monthly basis, partially offsetting broader inflationary pressures. Core inflation is projected to rise to 7.9% year-on-year, compared to a recent low of 7.2% recorded in August 2025.

Pakistan’s inflation had peaked at 38% in May 2023 before gradually easing into single digits by September 2024. It fell to 0.3% in April 2025 before beginning to rise again in recent months.

Optimus Capital expects inflation to trend upward through the remainder of FY26, potentially reaching 9–10% year-on-year by June 2026. The brokerage anticipates the strongest monthly reading in March, citing Ramadan-related demand, higher crude oil prices amid geopolitical tensions, and fuel cost adjustments in electricity bills.

It projected average inflation for FY26 at 6.7%, within the State Bank of Pakistan’s target range of 5–7%, and estimated a 12-month forward real interest rate of about 2.6% for February 2026.