Pakistan is heading towards a new round of price pressures after a sharp rise in petroleum prices, with analysts warning that inflation could climb above 15 percent in the coming months.
The latest increase in petrol and diesel rates follows the government’s move to scale back heavy subsidies, which had been keeping fuel costs in check. The sudden jump is expected to ripple through the economy, pushing up transport, electricity and daily household expenses.
Official data shows that inflation has already started to edge up. The Consumer Price Index rose 7.3 percent year on year in March 2026, slightly higher than 7 percent recorded in February. On a weekly basis, prices also moved up, with the Sensitive Price Index increasing by 1.01 percent for the week ending April 2. The rise was led by a sharp increase in liquefied petroleum gas prices.
Pressure likely to build in coming months
Economic analysts believe the situation may worsen soon. Ali Khizar Aslam said inflation could reach around 13 percent in April and cross 15 percent by May and June, driven mainly by higher fuel and energy costs.
With inflation expected to pick up, the central bank may respond by tightening monetary policy. Analysts are now predicting an increase of 1 to 2 percent in the policy rate in the next review to control rising prices.
The rupee is also likely to come under pressure. Projections suggest the local currency could weaken by 5 to 7 percent, with the dollar possibly nearing Rs290 by June if current trends continue.
Last month, the central bank kept its policy rate unchanged at 10.5 percent, as markets expected a cautious approach due to global uncertainty and rising oil prices linked to tensions in the Middle East.
At the same time, energy supply concerns are adding to the risk. A possible shortfall in RLNG imports and issues in transmission could lead to higher electricity costs and power outages, especially in Punjab during peak summer demand.
In a partial relief move, Prime Minister Shehbaz Sharif announced a temporary cut of Rs80 per litre in the petroleum levy on petrol for one month, a day after the steep price hike.
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