IMF projects FY27 inflation at 8.4% as Pakistan’s weekly SPI rises 14.52% YoY

The International Monetary Fund (IMF) has projected Pakistan’s Consumer Price Index-based inflation at 8.4% for FY2026-27 and warned that inflation could exceed 10% in the final quarter of FY26, as weekly inflation continued to rise amid higher food and fuel prices.

According to the IMF’s third review, inflationary pressures were expected to increase because of rising global oil prices and tensions in the Middle East. The Fund urged the State Bank of Pakistan to maintain a tight monetary policy stance to contain inflationary pressures and prevent second-round effects.

The IMF noted that headline inflation accelerated to 7.3% in March 2026, the highest level since August 2024, breaching the SBP’s 5-7% target range for the first time since October 2024.

According to the report, CPI inflation rose further to 10.9% year-on-year in April due to higher fuel prices and food-related base effects, while core inflation increased to 8.2% because of the pass-through of fuel costs to transport services.

The Fund stated that inflation had averaged 4.5% in the previous year and said the latest increase was largely linked to energy and food prices, although tight monetary policy was expected to gradually bring inflation back to the target range by FY28.

Separately, weekly inflation measured by the Sensitive Price Index increased 0.47% during the week ended May 14, according to data released by the Pakistan Bureau of Statistics.

The increase was mainly driven by a 22.13% rise in tomato prices, followed by increases in prices of gents’ sponge chappals by 16.69%, ladies’ sandals by 7.15%, wheat flour by 4.94%, diesel by 3.76% and petrol by 3.73%.

Prices of onions increased 2.98%, bananas 1.93%, potatoes 0.74%, curd 0.54%, fresh milk 0.48% and sugar 0.46%.

On a year-on-year basis, SPI inflation increased 14.52%, mainly because of higher prices of petrol by 64.23%, diesel by 61.61%, wheat flour by 57.56%, electricity charges for Q1 by 52.58%, onions by 50.06%, LPG by 48.34% and tomatoes by 40.66%.

Prices of mutton increased 15.79%, chili powder 15.20%, garlic 14.36%, beef 12.96% and bananas 11.86% compared to the same period last year.

According to PBS data, weekly declines were recorded in prices of chicken by 6.34%, eggs by 3.83%, garlic by 2.20% and LPG by 1.23%.

The PBS said prices of 23 out of 51 monitored items increased during the week, while prices of nine items declined and 19 items remained unchanged.

On a yearly basis, prices of potatoes declined 43.07%, pulse gram 21.33%, chicken 20.67%, eggs 18.22%, sugar 15.04%, powdered salt 13.26%, pulse masoor 12.24% and pulse moong 2.03%.