The State Bank of Pakistan (SBP) on Monday raised its benchmark policy rate by 100 basis points (bps) to 11.5% on Monday, warning of “intensified risks” to the macroeconomic outlook due to the US-Israel war on Iran.

In a statement, the central bank said that its Monetary Policy Committee (MPC) noted that global energy prices, freight charges and insurance premiums continued to remain significantly above pre-conflict levels due to the Mideast conflict.

Disruptions in the supply chain have also contributed to the prevailing uncertainty, it added.

While the incoming data has been broadly in line with the MPC’s expectations, the impact of the ongoing global developments will be visible in key economic indicators going forward, the SBP warned.

The MPC assessed that inflation is likely to increase and remain above the target range in the next few quarters.

Accordingly, the committee deemed it necessary to maintain a tighter policy stance to keep inflation expectations anchored and contain second-round effects of the current supply shock to bring inflation within the target range, the SBP said.

This will be important to preserve macroeconomic stability, which is necessary for achieving sustainable economic growth, it added.

Since its last meeting, the MPC highlighted several key developments, including a rise in inflation to 7.3% in March and an increase in core inflation to 7.8%. It also noted deteriorating consumer and business confidence in recent surveys.

On the macroeconomic front, real GDP grew by 3.8% in the first half of fiscal year 2026, compared to 1.9% a year earlier. The current account posted a small surplus during July-March FY26.

SBP’s foreign exchange reserves stood at approximately $15.8 billion as of April 24, bolstered by Eurobond issuances, marking Pakistan’s return to international capital markets after more than four years.

The MPC also referenced the staff-level agreement reached with the International Monetary Fund on March 27 as a positive development supporting external financing.

“In light of the above developments and evolving risks, the MPC viewed today’s decision as important to achieve the objective of price stability over the medium term,” the SBP said.

The MPC stressed the need for continued fiscal discipline, structural reforms, and strengthening of external buffers to ensure resilience against global shocks and sustain long-term growth.

Likely rise in inflation

Inflation was projected to increase up to the upper bound of the target range before the start of the Middle East conflict, mainly due to adverse base effect, the SBP said, adding that the energy price shock has led to a surge in fuel prices, which have already begun to seep into core inflation via transport fares.

However, contained food inflation amidst ample supplies is likely to offset some of the impact on headline inflation, the central bank said.

Going forward, the central bank’s MPC assessed that the current supply shock may push inflation to double digits in the coming months before it starts to ease subsequently.

It expects inflation to stay above the upper bound of the target range of 5% to 7% for most of the fiscal year 2027.

The SBP said that the outlook is subject to multiple risks, particularly the duration and intensity of the Mideast conflict, the extent of pass-through of changes in global energy prices to the domestic economy, and potential fiscal slippages.

Sir Keir Starmer claimed “the tide could be turning” against shoplifting as he set out the Government’s efforts to crack down on retail crime.

The Prime Minister said shop thefts were “slightly down” in the latest figures and he wanted wider use of technology which allows CCTV footage to be shared immediately with the police.

His comments came as a think tank highlighted figures showing 67% of shoplifting offenders go on to commit another offence within 12 months, up from 55% before the pandemic.

In an address to the Usdaw shopworkers’ union, Sir Keir said: “It’s disgraceful that people just working in their shop have to take abuse from customers.

“It’s disgraceful that people feel sick to the stomach thinking about how they’re going to get through the day and it’s disgraceful that people can have their lives and livelihoods ruined by persistent shop theft.”

He said the Government has put an extra 3,000 neighbourhood police officers on the streets and scrapped the “ridiculous”  rule which left theft of goods worth less than £200 “not properly investigated” by police.

“That was a shoplifters’ charter, and we’ve ended it and not before time,” he said.

“We’ve toughened up punishment too. We’re giving police stronger powers, making the abuse and assault of retail workers a specific crime and giving you the same protections as emergency workers.”

Sir Keir said he was “not blind to how big this challenge is” but said the number of people charged had gone up 17% in the latest statistics and shop theft was down.

The latest Office for National Statistics (ONS) data showed shoplifting offences fell slightly last year, down from 516,611 in 2024 to 509,566 in 2025.

Sir Keir said: “It’s only slightly down,  but the tide could be turning.”

The Prime Minister’s speech came as the Centre for Social Justice (CSJ) warned of a high street crime epidemic.

The centre-right think tank highlighted figures uncovered by former Tory leader Sir Iain Duncan Smith through parliamentary questions which showed the extent of repeat offending.

The think tank’s analysis showed the average number of offences committed by shoplifters has nearly doubled in five years, rising from 5.5 to 9.1 offences per convicted thief.

Sir Iain, the CSJ’s chairman, said: “Communities across Britain are suffering from a high street crime wave.

“Set against years of economic difficulties, there is a risk that some of our town and city centres are left permanently hollowed out.”

A standalone offence for assaulting a retail worker is set to be introduced in the Crime and Policing Bill going through Parliament.

But the two Houses of Parliament are currently in a tussle over the final draft of the Bill as the end of the parliamentary session nears.

Almost 80% of shop workers said they experienced verbal abuse, more than half said they were threatened by a customer and 10% said they were assaulted in the latest annual survey by retail trade union Usdaw.

The small drop in shoplifting in the ONS figures may reflect a change in how such offences are recorded.

Offences where someone has entered a retail premises, steals, then either uses or threatens violence against staff or other people should be classed as robbery of business, police forces were advised in April last year.

This may account for the steep increase in the number of such robberies recorded, which rose 78% to 26,158 in 2025.

Joanne Thomas, Usdaw general secretary, said the incoming legislation delivers “much-needed protection of retail workers’ law”.

She said: “While there has been a welcome small decrease in shoplifting across last year, the fact is retail crime continues to be a significant issue for the sector and particularly staff.

“Usdaw’s last survey found that this is in no way a victimless crime, with two-thirds of attacks on retail staff being triggered by theft or armed robbery.

“Having to deal with repeated and persistent offences can cause issues beyond the theft itself, like anxiety, fear and physical harm to retail workers.”

Shadow home secretary Chris Philp accused the Prime Minister of “brazen cheek”, saying Sir Keir was “part of the problem, not the solution”.

He said: “Shoplifting is up 8% under Labour, made worse by a drop in total police numbers of 1,300 in the last year alone.

“Starmer is abolishing prison sentences under a year, which means virtually no shoplifter will ever go to prison.

“The Conservative plan to take back our streets will see 10,000 extra police hotspot patrol high crime areas, combined with a tripling of stop and search and widespread use of live facial recognition to catch wanted criminals.

“Only the Conservatives have a plan to fix this.”