Pakistan’s inflation is expected to rise in February 2026, with the National Consumer Price Index (NCPI) projected to reach 7.4% year-on-year (YoY), according to a report by Optimus Capital Management. The brokerage highlighted that the increase reflects pressure from rising electricity tariffs, higher gold prices, and a base effect-driven acceleration, signaling a notable uptick in the cost of living after months of moderation.
The report anticipates a 0.7% month-on-month (MoM) increase in headline CPI for February, up from 5.8% YoY in January 2026. This marks the highest inflation rate in nearly 18 months and indicates the beginning of a phase of accelerating price pressures. Electricity adjustments and geopolitical tensions affecting crude oil prices are expected to contribute significantly to the rising inflation trajectory.
Optimus Capital noted that while the food index may ease slightly by 0.4% MoM, providing some relief, core inflation is forecast to edge higher to 7.9% YoY, reversing a recent low of 7.2% recorded in August 2025. The report underlines that base effects from previous low inflation months are amplifying current upward pressures, suggesting that the acceleration may continue in the coming months.
Pakistan has faced persistent inflation challenges over the past few years. Following a peak of 38% in May 2023, headline inflation gradually declined, entering single-digit territory by September 2024 at 6.9% and reaching an unprecedented low of 0.3% in April 2025. Since then, inflation has been gradually increasing, reflecting renewed upward momentum in consumer prices, with January 2026 recording 5.8% YoY.
Looking ahead, Optimus Capital expects inflation to trend higher throughout fiscal year 2026, potentially reaching 9-10% YoY by June 2026. The report identifies three key drivers for this acceleration: Ramadan demand seasonality, higher crude oil prices amid geopolitical tensions, and positive FCA electricity charges. Despite these pressures, relative stability in the Pakistani rupee and softer global oil prices are expected to moderate the impact.
The brokerage projects an average FY26 inflation rate of 6.7% YoY, which remains within the State Bank of Pakistan’s target range of 5-7%, implying a 12-month forward real interest rate of approximately 2.6% by February 2026. Policymakers and market participants will closely monitor these developments as inflation dynamics will influence monetary policy decisions, consumer purchasing power, and broader economic stability.
Overall, the February 2026 forecast reflects the complex interplay between domestic price pressures, international commodity trends, and monetary stability. Rising electricity tariffs and gold prices are emerging as significant contributors to the short-term inflationary cycle, while sustained monitoring and policy measures will be crucial to maintaining macroeconomic stability and supporting household resilience across Pakistan.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.