Pakistan’s inflation hits 23-month high at 11.7% in May

WEB DESK: Pakistan’s headline inflation accelerated to 11.7 per cent on a year-on-year (YoY) basis in May 2026, touching its highest level in nearly two years, according to data released by the Pakistan Bureau of Statistics (PBS) on Monday.

The latest Consumer Price Index (CPI) reading marks a notable increase from the 10.9pc recorded in April 2026, and a stark jump from the low base of 3.5pc seen in May 2025, according to Business Recorder.

Brokerage house Arif Habib Limited (AHL) noted that the May figure represents the highest inflationary reading since June 2024, highlighting renewed pressure on consumer prices after a period of relative stability.

On a month-on-month (MoM) basis, the CPI edged up by 0.5pc in May 2026. While this indicates a slowdown compared to the sharp 2.5pc monthly surge witnessed in April, it contrasts with the 0.2pc contraction recorded during the same month last year.

For the first eleven months of the current fiscal year, average inflation stood at 6.69pc, up from 4.61pc during the corresponding period of the previous fiscal year.

Urban and rural divergence

A closer look at the data reveals that inflationary pressures remained broad-based across both urban and rural centers. Urban CPI inflation rose by 11.8pc on a year-on-year basis in May 2026, compared to 11.1pc in April and 3.5pc in May 2025. Monthly urban inflation grew by 0.7pc, slowing down from the 2.7pc expansion seen in the preceding month.

Meanwhile, rural CPI inflation was recorded at 11.5pc on a year-on-year basis, up from 10.6pc in April 2026 and 3.4pc in May 2025.

On a sequential basis, rural prices increased by 0.3pc in May, a sharp deceleration from the 2.1pc jump in April, and a reversal from the 0.5pc deflation observed in May 2025.

Concurrently, the Sensitive Price Index (SPI) which monitors the prices of essential kitchen items on a weekly basis surged by 12.0pc YoY in May, up from 10.1pc in April.

Monetary tightening resumes

The steady build-up in inflationary momentum follows recent proactive measures by the central bank to rein in demand-side pressures. In April, the State Bank of Pakistan (SBP) raised its benchmark policy rate by 100 basis points to 11.50pc.

The move marked the central bank’s first rate hike in almost three years, signaling an end to the monetary easing cycle as policymakers pivot to counter the stubborn resurgence of inflation in the economy.