CPI inflation projected at up to 11.5% amid rising food prices
Pakistan’s headline inflation, measured by the Consumer Price Index (CPI), is expected to rise to a 23-month high in May 2026, driven mainly by higher food prices, according to a report released by Topline Securities.
The brokerage projected inflation for May 2026 in the range of 11.0% to 11.5% year-on-year, compared with 10.89% recorded in April 2026 and 3.46% in May 2025.
On a monthly basis, inflation is expected to increase by 0.07%, mainly due to a rise in food prices.
Analysts said food inflation is likely to increase by 1.2% month-on-month, led by higher prices of wheat flour, wheat, and potatoes. Wheat flour prices are estimated to rise by 9.47%, wheat by 5.52%, and potatoes by 5.24% during the month.
However, the increase in food inflation may be partially offset by lower prices of tomatoes and onions, which are expected to decline by nearly 28% and 13%, respectively.
The report noted that the transport segment showed mixed trends following volatility in global oil markets linked to tensions involving Iran, the United States, and Israel.
Petrol prices increased by 5.6% during the month, while prices of high-speed diesel (HSD) declined by 23.1%, according to the estimates.
Meanwhile, the Housing, Water, Electricity, and Gas category is expected to register a decline of 0.79% month-on-month, mainly due to lower electricity tariffs and reduced liquefied petroleum gas (LPG) prices.
Electricity charges are projected to fall by around 3.8% because of a negative Fuel Charges Adjustment (FCA) and Quarterly Tariff Adjustment (QTA), while LPG prices are expected to decline by nearly 4% during the month.
The brokerage said real interest rates in May 2026 are likely to remain between zero and 50 basis points, lower than Pakistan’s historical average range of 200 to 300 basis points.
Topline Securities forecast average inflation for fiscal year 2025-26 at 7.1%, while projecting inflation to rise further to 8.2% in fiscal year 2026-27.
Economists continue to closely monitor inflation trends as policymakers assess future monetary policy decisions and economic stability.