Pakistan’s headline Consumer Price Index (CPI) inflation eased to 9.2 percent on a year on year basis in July 2026, compared with 11.1 percent in the previous month and 4.1 percent in July 2025. The decline from June indicates a moderation in annual price pressures as the new fiscal year began. However, the monthly inflation reading presented a different picture, with consumer prices increasing by 1.2 percent in July compared with a 0.3 percent decline recorded in the previous month.
The July annual inflation figure reflects a significant moderation from the 11.1 percent rate recorded in June 2026. At the same time, the 9.2 percent reading remained considerably higher than the 4.1 percent inflation recorded in July 2025, showing that consumer prices continued to rise at a faster annual pace than a year earlier. The monthly increase of 1.2 percent also indicates that price movements remained active during the opening month of FY2027 despite the decline in the year on year inflation rate.
Transport remained the largest contributor among the major inflation categories, with prices increasing by 15.1 percent on a year on year basis in July 2026. Communication also recorded a substantial annual increase of 13.6 percent. Nonperishable food items rose by 11.6 percent, while clothing and footwear prices increased by 9.2 percent. Education recorded an annual increase of 9.0 percent, placing it among the categories experiencing relatively higher price growth during the month.
Housing, water, electricity, gas and fuels recorded an annual increase of 7.1 percent in July. Health related prices increased by 7.8 percent, while furnishing and household equipment maintenance rose by 6.9 percent. Restaurants and hotels recorded a 5.7 percent increase compared with the same month last year. These movements indicate that price pressures remained spread across several household expenditure categories rather than being limited to food or energy related items.
Food prices also contributed to the overall inflation rate, although the increase varied between different food categories. Nonperishable food items recorded a 11.6 percent year on year increase, while prices of perishable food items rose by 5.2 percent. The difference between the two categories shows that consumers faced varying degrees of price pressure depending on the type of food products purchased during July.
Other categories also recorded annual price increases. Alcoholic beverages and tobacco prices rose by 3.2 percent, while recreation and culture recorded a relatively lower increase of 1.3 percent. Clothing and footwear increased by 9.2 percent, while education prices rose by 9.0 percent. Taken together, the figures show that annual inflation remained broad based across a number of consumer spending categories.
The monthly inflation reading of 1.2 percent in July is also notable because it followed a 0.3 percent decline in June. The reversal indicates that prices increased during July after falling on a monthly basis in the preceding month. While the annual inflation rate moderated, the monthly increase suggests that consumers continued to experience fresh price adjustments across the economy at the start of FY2027.
The Sensitive Price Indicator (SPI), another measure used to track short term price movements, increased by 0.05 percent during the week ending August 27, 2026. The weekly movement was relatively modest, indicating limited overall movement in the prices of the items included in the indicator during that particular week.
During the week ending August 27, prices of 20 out of the 51 items monitored under the Sensitive Price Indicator increased. Prices of 11 items declined, while the remaining 20 items remained stable. The equal number of items recording increases and remaining unchanged indicates that price movements were mixed across the basket, with some products becoming more expensive while others either declined or recorded no change.
The inflation figures provide an early indication of price conditions as Pakistan moves through FY2027. The moderation in annual CPI inflation from 11.1 percent in June to 9.2 percent in July provides some relief from the higher inflation rate recorded at the end of the previous month. However, the increase from 4.1 percent in July 2025 and the 1.2 percent monthly rise show that price pressures remain relevant for households and policymakers.
Transport, communication and nonperishable food emerged among the categories with the highest year on year increases, while housing and utility related prices, health, education, clothing and household maintenance also recorded notable increases. Perishable food, restaurants and hotels, and recreation and culture recorded comparatively lower annual increases.
Overall, Pakistan’s headline inflation rate moderated in July 2026, but the monthly increase in consumer prices and the higher year on year rate compared with July 2025 indicate that inflationary pressures have not disappeared. The latest figures show a mixed price environment at the beginning of FY2027, with annual inflation easing while several major household expenditure categories continue to record significant year on year increases.
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