Financial experts at Arif Habib Limited have issued a projection indicating that Pakistan’s headline inflation is set to experience a sharp year-on-year increase, reaching 7.6% in March 2026. This forecasted jump represents a significant departure from the exceptionally low 0.7% recorded in March 2025. Analysts clarify that much of this dramatic statistical rise is due to a low base effect, as the price levels recorded during the same month last year were unusually subdued. Despite the jump in the headline figure, the broader economic data suggests a complex internal dynamic where certain sectors are seeing moderation while others face intense upward pressure.
In a more positive turn for long-term stability, core inflation—which excludes the volatile food and energy sectors—is expected to moderate. The Non-Food Non-Energy index is projected to settle at 8.3% for March 2026, down from the 9.2% seen a year prior. Looking at the cumulative data for the first nine months of the 2026 fiscal year, average inflation is likely to hover around 5.7%, a slight increase from the 5.4% noted during the same period in the previous year. Meanwhile, the cumulative core inflation for this nine-month window shows a healthy downward trend, dropping to 7.6% from 10.3% in the corresponding period of the last fiscal year.
On a month-on-month basis, the cost of living is expected to climb by 1.5%, with the transport and housing sectors serving as the primary engines of this growth. The transport index is particularly concerning, with a projected monthly surge of 15.6% fueled by rising petroleum prices. Similarly, the housing index is anticipated to rise by 1.8% month-on-month. This increase is largely attributed to higher electricity tariffs following a positive Fuel Cost Adjustment of 1.63 rupees per kilowatt-hour, a move that directly impacts household budgets and industrial operational costs.
Conversely, the food sector is providing some minor relief to consumers. The food index is forecast to decline slightly by 0.1% on a monthly basis, led by a reduction in the prices of essential kitchen items such as tomatoes, eggs, fresh vegetables, and wheat. However, when looking at the year-on-year breakdown, several categories still show significant double-digit growth. The miscellaneous category leads the pack with a 21.7% increase, followed by transport at 16.3% and housing at 11.7%. Other essential services like education and health are also projected to see annual increases of 7.9% and 7.5%, respectively.
According to the analysis, the inflationary pressures for March 2026 remain broad-based, affecting everything from essential commodities to basic services. The persistent rise in energy and fuel costs continues to be a major hurdle for both households and policymakers, as these expenses often have a secondary impact on the pricing of other goods. As the government navigates these cost-of-living challenges, the focus remains on balancing necessary energy price adjustments with the need to protect the purchasing power of the general public.
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