Pakistan faces a potential surge in inflation following record increases in petroleum prices, with analysts warning that CPI inflation could exceed 15% in the coming months. Rising fuel and energy costs are the primary drivers of the expected spike.
The Consumer Price Index (CPI) recorded a year-on-year increase of 7.3% in March 2026, up from 7% in February. The Sensitive Price Index (SPI) for the week ending April 2 also rose by 1.01%, largely due to a 13.28% jump in Liquefied Petroleum Gas (LPG) prices, according to the Pakistan Bureau of Statistics.
Ali Khizar Aslam, Director Research at Business Recorder, forecasted inflation to reach 13% in April and exceed 15% by May and June. He warned that sustained fuel price pressures could trigger broader cost-of-living challenges for households.
In response, the central bank may increase the policy rate by 1–2% in the upcoming monetary policy review to contain inflationary pressures. Analysts also anticipate currency depreciation, projecting the rupee could fall 5–7%, pushing the USD to around 290 PKR by June.
The fuel price spike followed the government’s decision to raise diesel prices by 55% and petrol by 43%. However, Prime Minister Shehbaz Sharif announced a temporary Rs80 per litre reduction in the petroleum levy on petrol for one month to ease public burden.
An emerging energy challenge is also affecting the outlook. Potential RLNG shortfalls from Qatar, combined with transmission bottlenecks, could raise electricity costs and cause load shedding, especially in Punjab during the peak summer months.
Despite rising costs, the central bank kept its benchmark policy rate at 10.5% last month, balancing market expectations against the backdrop of escalating Middle East tensions that have inflated global energy prices.
