Pakistan’s inflation rate rose sharply in May, signalling a renewed increase in price pressures just weeks after the central bank raised interest rates for the first time in nearly three years.
Data released by the Pakistan Bureau of Statistics (PBS) on Monday showed that headline inflation, measured by the Consumer Price Index (CPI), climbed to 11.7 percent year-on-year in May 2026. The reading was higher than April’s 10.9 percent and marked a significant increase from 3.5 percent recorded in May last year.
The latest figures suggest that the period of relatively low inflation seen during much of the current fiscal year may be coming to an end, with consumers facing higher costs across a range of goods and services.
On a monthly basis, inflation increased by 0.5 percent in May. While prices continued to move upward, the pace of monthly growth slowed compared with the 2.5 percent rise recorded in April. In May 2025, prices had fallen by 0.2 percent from the previous month.
Urban and rural areas see higher inflation
Inflation accelerated in both urban and rural parts of the country.
In urban centres, CPI inflation reached 11.8 percent in May, up from 11.1 percent a month earlier and well above the 3.5 percent recorded in the same month last year. Urban prices rose 0.7 percent compared with April.
Rural inflation also gathered pace, increasing to 11.5 percent year-on-year from 10.6 percent in April. A year ago, rural inflation stood at 3.4 percent. On a monthly basis, prices in rural areas increased by 0.3 percent.
The Sensitive Price Indicator (SPI), which tracks the movement of prices of essential items over the short term, also pointed to growing inflationary pressure. SPI inflation rose 12 percent year-on-year in May, compared with 10.1 percent in April. On a monthly basis, it increased by 0.7 percent.
Fiscal year average remains below current reading
Despite the recent rise, average inflation during the first eleven months of fiscal year 2025-26 stood at 6.69 percent. This was higher than the 4.61 percent recorded during the same period of the previous fiscal year.
The inflation data comes after the State Bank of Pakistan raised its benchmark policy rate by 100 basis points to 11.50 percent in April. The move marked the central bank’s first rate increase in almost three years and reflected concerns over mounting inflation risks.
Economists and market participants will now be closely watching whether inflation continues to rise in the coming months and how it influences the central bank’s monetary policy outlook.
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