Pakistan inflation falls to 9.2% in July 2026: PBS

Pakistan’s annual inflation eased to single digits in July 2026, with the latest official figures showing a noticeable decline in price growth compared to the previous month.

Pakistan’s annual inflation eased to single digits in July 2026, with the latest official figures showing a noticeable decline in price growth compared to the previous month. However, economists cautioned that inflationary pressures have not disappeared, as higher fuel costs and other economic challenges continue to weigh on the outlook.

According to data released by the Pakistan Bureau of Statistics (PBS) on Monday, the Consumer Price Index (CPI) recorded an annual inflation rate of 9.2% in July 2026. The reading marked a significant decline from 11.1% in June, although it remained considerably higher than the 4.1% recorded in July 2025.

On a monthly basis, consumer prices increased by 1.2% during July, reversing the 0.3% decline witnessed in June. In comparison, monthly inflation had risen by 2.9% in July last year.

Urban and rural inflation

The PBS data showed that inflation in urban areas slowed to 8.7% year-on-year in July, down from 11.2% in June. During the same month last year, urban inflation had stood at 4.4%.

Month-on-month, urban prices climbed 1.2%, compared to a 0.5% decline in June and a 3.4% increase recorded in July 2025.

Meanwhile, rural inflation also moderated, with the annual rate easing to 9.9% in July from 10.9% a month earlier. Rural inflation had been 3.5% in the corresponding month of last year.

On a monthly basis, rural prices increased by 1.2%, compared with no change in June, while July 2025 had witnessed a 2.2% monthly increase.

Government projects inflation to remain elevated

The Finance Division had earlier projected inflation to remain between 9% and 10% in July, warning that rising international oil prices could continue to exert pressure on domestic prices.

The ministry’s latest economic outlook also highlighted concerns over external investment, noting that Pakistan’s foreign direct investment (FDI) fell by 33.9% during the last fiscal year, declining from $2.48 billion in FY2024-25 to $1.64 billion in FY2025-26.

SBP keeps policy rate unchanged

Last week, the State Bank of Pakistan’s Monetary Policy Committee maintained the benchmark policy rate at 11.5% during its first monetary policy meeting of the new fiscal year.

Speaking after the decision, SBP Governor Jameel Ahmad said inflation was expected to decline in July and expressed optimism that it would gradually move towards the central bank’s target.

He said the State Bank expects inflation to settle within the upper end of its 5-7% target range by the close of the current fiscal year.

Analysts see base effect behind slowdown

Market analysts had largely anticipated inflation returning to single digits in July, though many argued that the improvement was mainly due to favourable statistical base effects rather than a broad-based easing in price pressures.

Analysts at Ismail Iqbal Securities estimated July inflation at 9.3%, saying the decline reflected comparison with a higher base from the previous year rather than a sustained reduction in inflationary momentum.

Similarly, JS Global projected headline inflation at 9.1% for July, indicating that while inflation has eased, underlying economic pressures continue to pose risks for the months ahead.

The latest inflation reading provides some relief for consumers and policymakers, but economists believe the path ahead will depend on global commodity prices, exchange rate stability, energy costs and the government’s fiscal management during the current financial year.