Pakistan is experiencing a surge in inflation attributed to escalating tensions in the Middle East, particularly involving Israel, the US, and Iran. The country’s inflation, measured by the Sensitive Price Indicator (SPI), has reached 12.15%, a 74-week high, due to the recent spike in global energy prices. This increase marks a significant shift from the relative stability seen in late 2025 when inflation had dropped to as low as 2.4%.
Analysts at Topline Securities have noted that the current inflation spike underscores the severity of the ongoing price shock. The sudden rise in inflation, which has now surpassed double-digit levels, is primarily driven by the volatility in global energy markets triggered by geopolitical tensions in the Middle East. This volatility has led to a sharp increase in fuel prices in Pakistan, where fuel costs play a crucial role in influencing overall inflation.
The surge in fuel prices has not only impacted transportation and logistics costs but has also triggered a chain reaction, resulting in higher prices for essential goods. This energy shock has further exacerbated food inflation, putting additional strain on household budgets. Prices of staple foods like onions, wheat flour, and tomatoes have seen significant increases compared to the previous year, along with notable price hikes in protein sources such as mutton and beef.
On a weekly basis, the pressure on prices has intensified, with diesel prices rising by 54.71% and petrol by 17.86%. These increases have led to immediate spikes in transportation costs, subsequently affecting the prices of perishable food items within a short span of time, including tomatoes, potatoes, and onions.
