Energy costs, supply pressures seen pushing March inflation to 7.3%

Pakistan’s inflation is projected to rise to 7.3% year-on-year in March 2026, driven mainly by increases in fuel-related costs and supply-side pressures, according to an economic update by AKD Securities.

The housing and transport components are expected to record significant increases of 11.3% and 19.5% year-on-year, respectively, reflecting the impact of higher fuel prices. The miscellaneous category is projected to rise by 20.2%, led by a sharp increase in personal effects.

Other segments, including education, health, and restaurants, are expected to post increases of 7.9%, 7.1%, and 5.6%, respectively, while the recreation and culture category may decline by 3% due to lower textbook prices.

On a month-on-month basis, inflation is estimated to increase by 1.2% in March, marking the highest rise in five months. The increase is primarily attributed to a sharp rise in the transport index, which is expected to grow by 18.7% due to higher prices of motor spirit and high-speed diesel.

Housing costs are also projected to increase for a sixth consecutive month, supported by higher prices of liquefied petroleum gas and electricity. LPG prices are expected to rise by 18.3% month-on-month amid supply disruptions linked to the Strait of Hormuz, while electricity charges are projected to increase by 3.4 percent due to higher fuel adjustment costs.

In contrast, the food segment is expected to decline by 1% month-on-month despite Ramadan, supported by improved supply conditions and lower prices of perishable items. Prices of tomatoes, potatoes, and eggs are projected to decrease, with eggs expected to fall by 16.7% and tomatoes by 22.5%.

The update indicates that while food prices may provide some relief, overall inflation momentum remains driven by energy costs and supply-side pressures linked to global developments.