Inflation falls to single digits at 9.2% after June’s 11.1%

Pakistan’s consumer price inflation eased to 9.2% year-on-year in July 2026, returning to single digits after standing at 11.1% in June, according to figures released by the Pakistan Bureau of Statistics (PBS) on Monday. The inflation reading for July 2025 had stood at 4.1%.

On a month-on-month basis, prices increased 1.2% in July, reversing the 0.3% decline recorded in June. In comparison, prices had risen 2.9% month-on-month in July last year.

Urban inflation slowed to 8.7% year-on-year from 11.2% in the previous month, while rural inflation eased to 9.9% from 10.9% in June. Both urban and rural consumer price indices recorded a 1.2% month-on-month increase.

The moderation in headline inflation came in line with expectations after the Finance Division, in its latest monthly economic outlook, projected July inflation to remain in the 9-10% range. The ministry, however, warned of persistent inflationary risks stemming from higher global oil prices and a sharp decline in foreign direct investment (FDI).

According to official data, FDI fell 33.9% to $1.64 billion in the previous fiscal year from $2.48 billion a year earlier.

The State Bank of Pakistan (SBP) had maintained its policy rate at 11.5% during the first Monetary Policy Committee meeting of fiscal year 2026-27. SBP Governor Jameel Ahmad had said the central bank expected consumer price inflation (CPI) to decline in July and reiterated that inflation was likely to move toward the upper end of the 5-7% target range by the end of the current fiscal year.

Market analysts had also largely anticipated the return to single-digit inflation. Ismail Iqbal Securities forecast July inflation at 9.3% and described the moderation as “largely base-driven rather than a genuine easing in momentum,” while JS Global had projected a reading of 9.1%.

Analysts noted that although headline inflation has improved due to favourable statistical base effects, underlying price pressures remain intact.

The latest inflation reading provides temporary relief for consumers and policymakers but keeps the central bank cautious as external risks and persistent core inflation continue to cloud the economic outlook.