Pakistan’s Consumer Price Index for May 2026 is expected to clock in at 11.0-11.5 percent year on year compared to 10.89 percent in April 2026 and 3.46 percent in May 2025. This would mark the highest monthly inflation reading in 23 months.
On a month on month basis, inflation for May 2026 is projected at 0.07 percent, primarily driven by a 1.2 percent increase in the food segment.
Food inflation is expected to rise mainly due to higher prices of wheat flour, up 9.47 percent month on month, wheat, up 5.52 percent, and potatoes, up 5.24 percent.
The increase was partially offset by declines in tomato prices of around 28 percent and onion prices of nearly 13 percent.
The transport segment recorded a slight decline in prices after the surge in international oil prices witnessed in March amid escalating Iran, US, and Israel tensions. Within the category, Petrol Super prices increased 5.6 percent while High Speed Diesel prices declined 23.1 percent.
The Housing, Water, Electricity, and Gas category is expected to decline 0.79 percent month on month in May 2026, mainly due to a nearly 4 percent decline in Liquefied Petroleum Gas prices and a 3.8 percent reduction in electricity charges.
Electricity charges declined due to a negative Fuel Charges Adjustment of Rs. 0.0102 per kilowatt hour compared to Rs. 1.6406 per kilowatt hour in April 2026, along with a Quarterly Tariff Adjustment of Rs. 0.3504 per kilowatt hour.
With inflation expected in the range of 11.0-11.5 percent during May 2026, real interest rates are projected to rise to 0-50 basis points, remaining below Pakistan’s historic average of 200-300 basis points.
Topline Research expects average inflation for FY2026 to clock in at 7.1 percent, while inflation for FY2027 is projected at 8.2 percent.
