The Finance Division, in its monthly economic update, expects consumer inflation to rise to 10%–11% in August 2026, up from 9.2% in July, as recent price pressures and fluctuations in international commodity and energy prices feed through to the domestic economy, it was reported on Tuesday.
The review also flags geopolitical uncertainty and the risk of heavy rains and flooding affecting the upcoming harvest.
The division named global energy prices and geopolitical uncertainty as the principal dangers to both the inflation path and the external account, and said continued prudent management and reform would be needed to protect what has been gained.
July’s reading of 9.2% was itself a sharp step down from 11.1% in June, though it sits well above the 4.1% of July 2025. Prices rose 1.2% over the month, reversing a fall of 0.3% in June.
Transport led the year-on-year increase at 15.1%, followed by communication at 13.6% and non-perishable food at 11.6%.
Clothing and footwear rose 9.2%, education 9.0%, health 7.8%, housing, water, electricity, gas and fuels 7.1%, and furnishing and household equipment maintenance 6.9%.
Restaurants and hotels added 5.7%, perishable food 5.2%, alcoholic beverages and tobacco 3.2%, and recreation and culture 1.3%.
The Sensitive Price Indicator edged up 0.05% in the week to 27 August 2026, with 20 of the 51 items tracked dearer, 11 cheaper and 20 unchanged.
On the trade front, Washington has imposed duties of 10% to 12.5% on goods from 60 countries, Pakistan among them, with effect from July 24, and a further 50% levy on Canadian goods from 19 August.
The division said the US measures add another layer of uncertainty to the external trade outlook.
Farming faces a separate hazard. The government said climatic threats including heavy rainfall and floods put the sector’s growth targets at risk, even as it continues to supply seeds, credit, fertiliser and machinery.
