Pakistan’s headline inflation is forecasted to sharply increase to 12.2% year-on-year in May 2026, driven by surging fuel and food prices despite some relief from lower electricity tariffs. The National Consumer Price Index (NCPI) is anticipated to rise by about 1% month-on-month, while core inflation is expected to stay high at 8.4% year-on-year.
The transport index is likely to see a significant monthly increase of nearly 6.9%, primarily due to an expected 9.5% surge in domestic fuel prices. Despite a slight easing in international oil prices, Pakistan’s fuel costs remain elevated due to increased premiums and adjustments in Inland Freight Equalisation Margin (IFEM).
Energy inflation is projected to soar to approximately 39% year-on-year in May, as per the report. The housing index might provide some relief with a projected 1.2% monthly decline due to reduced electricity tariffs, but this decrease is unlikely to offset the overall inflationary pressure from transport and food sectors.
The report highlights that the earlier easing trend in food inflation is dissipating, with food inflation expected to increase by about 1.5% month-on-month and nearly 9% year-on-year. The rise is driven mainly by higher wheat and wheat flour prices, both expected to climb around 7% during the month. Additionally, fresh milk and milk products are also anticipated to become more expensive, with prices likely to increase by around 2.7% month-on-month.
Optimus analyst Yasin Iqbal Kodvavi mentioned that rising food prices are significantly influenced by higher transportation costs, expensive fertilizers, and fluctuating procurement policies.
