Pakistan’s headline inflation, measured by the Consumer Price Index, recorded a notable increase to 7.3 percent on a year-on-year basis in March 2026. This figure marks an acceleration from the 7 percent reported in February 2026 and stands in stark contrast to the marginal 0.7 percent recorded in March 2025. The data indicates that the annual inflation rate has reached its highest point since August 2024, when it was recorded at 9.6 percent. On a cumulative basis for the first nine months of the 2026 fiscal year, the average CPI inflation now stands at 5.67 percent, compared to 5.25 percent during the same period in the previous fiscal year.
The monthly momentum of price increases showed a significant spike during March. On a month-on-month basis, inflation surged by 1.2 percent, a sharp acceleration from the modest 0.3 percent increase seen in February. This monthly jump was also higher than the 0.9 percent rise recorded in March of the previous year, suggesting that new inflationary pressures are becoming more embedded in the economy. The data signals a broadening of price hikes across various sectors, impacting both essential and non-essential goods and services.
Urban centers bore the brunt of the rising costs during the month. Urban CPI inflation climbed to 7.4 percent year-on-year in March, up from 6.8 percent in February. This is a substantial leap from the 1.2 percent recorded in March 2025. Monthly urban prices rose by 1.3 percent, gaining pace from a 0.3 percent increase in the prior month. In contrast, rural inflation showed a slight easing on an annual basis, slipping to 7.2 percent from 7.3 percent in February. However, this remains dramatically higher than the flat reading recorded in March 2025. Monthly rural prices rose by 1.0 percent, picking up from the 0.3 percent growth seen in February.
Wholesale and core inflation indicators also pointed toward increasing underlying pressures. The Wholesale Price Index experienced a major surge, jumping 6.7 percent year-on-year in March, compared to just 1 percent in February. On a monthly basis, the WPI rose by a steep 5.9 percent, reflecting a significant increase in the cost of goods at the primary distribution level. Meanwhile, core inflation, which excludes volatile food and energy prices, showed a steady upward trend. Urban core inflation edged up to 7.4 percent from 7.1 percent in February, while rural core inflation firmed up to 8.4 percent.
The 20 percent weighted trimmed mean, an indicator used to gauge the underlying trend by removing the most volatile price changes, further confirmed that inflationary pressures are becoming more broad-based. Urban trimmed mean inflation rose to 5.9 percent from 5.1 percent in February, while the rural trimmed mean climbed to 6.3 percent. This broadening of pressures across both urban and rural economies suggests that the cooling period seen in early 2025 has transitioned into a new phase of price acceleration. Analysts are closely watching these figures as they may influence future monetary policy decisions by the central bank in the coming months.
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