ISLAMABAD: Pakistan's annual consumer inflation is likely to ease to 9.0% in July, returning to single digits after three consecutive months of double-digit readings, helped by lower fuel prices and a favorable base effect, according to a report by Insight Securities.
If realized, the reading would compare with 11.1% in June and 4.1% in July last year. On a month-on-month basis, however, inflation is expected to rise about 1% as higher food prices offset the impact of lower motor fuel prices. The official inflation data is expected to be released by the Pakistan Bureau of Statistics in the coming days.
The inflation print will be closely watched by investors and policymakers after the State Bank of Pakistan kept its benchmark policy rate unchanged at its July monetary policy meeting, saying the inflation outlook remained highly dependent on geopolitical developments.
"Headline inflation is estimated at ~9.0% for Jul'26, compared to ~4.1% in SPLY and ~11.1% in Jun'26. Moderation in CPI following three consecutive months of double digit readings is mainly attributable to favorable base effect," the report said.
The brokerage said monthly inflation would likely be driven by higher food prices, while lower motor fuel prices were expected to exert downward pressure on the headline reading. It added that core inflation remained "sticky," projecting urban core inflation at about 8.7% and rural core inflation at about 8.2%.
Among items contributing to higher prices during the month, the report cited tomatoes, chicken, onions, potatoes and eggs, while motor fuel, liquefied petroleum gas (LPG), fresh fruit and sugar were expected to provide some relief.
Looking ahead, Insight Securities said inflation was likely to edge higher in August because of base effects before moderating thereafter. It said Pakistan's macroeconomic outlook remained broadly favorable, supported by continued fiscal discipline and external account stability, but warned that sustained increases in international oil prices and adverse weather affecting agricultural output remained key risks to the inflation outlook.
The brokerage said average inflation of around 9% over the next 12 months could provide the central bank with room to resume monetary easing in upcoming policy meetings.
