Higher transport, food and housing costs, along with a low-base effect, are expected to push Pakistan’s headline inflation sharply higher.
KARACHI: Pakistan’s headline inflation is expected to rise to 11.1% year-on-year (YoY) in August 2026, compared with just 3.0% in the same month last year, according to a report by Arif Habib Limited.
The report attributed the sharp increase primarily to a low-base effect, noting that inflation had remained significantly lower during the corresponding period of 2025.
It also pointed to broad-based price pressures across major components of the Consumer Price Index (CPI), with higher inflation expected across food, housing, transport, clothing and footwear, communication and other categories.
Transport, food to drive monthly inflation
Headline inflation is projected to increase by 1.1% month-on-month (MoM) in August 2026, mainly due to a 6.2% rise in the transport index and a 1.5% increase in food prices.
The food index is expected to rise by 1.5% MoM, largely because of higher prices of onions, pulses, eggs, chicken, potatoes and fresh vegetables.
The transport index is forecast to record the largest monthly increase, rising 6.2% MoM, primarily due to higher domestic petroleum product prices.
Housing costs also expected to increase
The housing index is projected to rise by 0.3% MoM during August.
According to the report, the increase would mainly reflect a 1.7% rise in LPG prices and the impact of a positive Fuel Charges Adjustment (FCA) of Rs0.75 per kilowatt-hour, applicable in August 2026.
The combination of higher energy and transport costs is expected to contribute to the overall monthly increase in consumer prices.
Broad-based inflationary pressures
On a year-on-year basis, inflation is expected to remain elevated across several major categories in August 2026.
The report projects inflation at 13.7% for food, 9.0% for housing, 9.1% for clothing and footwear, 6.6% for restaurants and hotels and 23.4% for transport.
Inflation in miscellaneous goods and services is projected at 9.1%, followed by 6.6% for household equipment, 7.7% for education, 7.6% for health and 13.4% for communication.
Recreation and culture inflation is projected at 1.2%, while tobacco inflation is expected at 3.3%.
Transport is expected to remain the fastest-rising major component on an annual basis, reflecting the impact of higher domestic fuel prices.
Core inflation also projected higher
Core inflation, measured through the non-food, non-energy (NFNE) index, is projected at 9.1% YoY in August 2026.
This compares with 8.5% in July 2026 and 7.2% in August 2025.
The projected rise in core inflation suggests that price pressures are not limited to volatile food and energy components, with underlying inflationary pressures also expected to remain firm.
The latest projections indicate that Pakistan’s inflation trajectory could remain challenging in the near term, with food, transport and energy-related costs continuing to influence consumer prices.