Pakistan’s annual inflation rate accelerated to 7% in February 2026, marking its highest level since October 2024 as electricity price hikes and mounting global risks added pressure to household budgets.
Data released by the Pakistan Bureau of Statistics showed the consumer price index (CPI) rose 6.98% year-on-year in February, up from 5.8% in January and sharply higher than 1.5% recorded in the same month last year.
Read More: Pakistan inflation hits 7.4% in February
The surge was largely driven by energy costs after the government scrapped cross-subsidies and imposed fixed electricity charges. The housing, water, electricity, gas and fuels category rose 9.65% annually and 1.86% month-on-month, with electricity tariffs alone climbing 10.03% compared to January.
Core inflation, which excludes food and energy, showed a slight easing in urban areas to 7.1% from 7.2%, while rural core inflation remained unchanged at 8.3%. Despite the February spike, the eight-month average inflation for fiscal year 2026 stands at 5.46%, within the government’s 6–7% target range.
The rise in CPI has narrowed real interest rates by around 120 basis points. Last month, the State Bank of Pakistan kept its benchmark policy rate unchanged at 10.5%, opting for caution amid economic uncertainty.
Wholesale price pressures are also building. The Wholesale Price Index increased to 1.0% in February from 0.2% in January, signalling that higher producer costs could feed into retail prices in the months ahead.
Food inflation gathered pace, with tomatoes up 82% year-on-year, wheat 42.6% and wheat flour 25.9%. However, prices of potatoes, chicken and several pulses declined sharply, partly offsetting the rise.
Read More: Weekly inflation declines by 0.54%
Analysts warn that Middle East tensions could further lift oil prices, inflate Pakistan’s import bill and weaken the rupee, compounding pressure on consumers already grappling with elevated utility bills and stagnant incomes.