Fuel price increases will cause inflation in Pakistan to reach a 21-month high.
According to a brokerage study released on Monday, a spike in fuel costs amid tensions in the Middle East is projected to cause Pakistan’s inflation to spike to between 11 and 11.5 percent year over year in April.
Up from 7.3 percent in March, the anticipated estimate would represent the strongest monthly inflation in about 21 months, reflecting increasing price pressures following a period of relative moderation.
Fuel costs have increased dramatically, with high-speed diesel rising more than 50% in April and gasoline up roughly 18%. This has increased cost pressures throughout the economy. The increase coincides with growing hostilities between Iran, the US, and Israel, which have upset international energy markets and driven crude oil prices past $100 per barrel, contributing to domestic inflation.
According to a research by Topline Securities, “inflation for April 2026 is projected at +2.65 percent on a MoM basis, primarily driven by a 22.5 percent MoM increase in the transport segment, following a sharp surge in international oil prices.”
With the price of liquefied petroleum gas growing quickly and power rates slightly increasing due to fuel and quarterly adjustments, housing and utilities are also predicted to contribute to inflation.
However, food inflation is probably going to offer some respite, since rising prices for vegetables and poultry will be countered by declining wheat and fresh fruit prices.
Analysts said that rising fuel and energy prices could reverse the current trend of disinflation and reduce household spending power, even though food prices have moderated.
The paper also pointed out that if inflation picks up speed as anticipated, real interest rates would go negative once more after more than two years, which might make monetary policy choices more difficult.
According to data released on April 1, Pakistan’s CPI inflation accelerated to 7.3 percent year-over-year in March after rising by 7 percent in February.