Pakistan’s inflation rose to 7% in February 2026, marking the highest level since October 2024, as electricity price hikes and rising global uncertainty pushed consumer costs upward.

According to the Pakistan Bureau of Statistics, the Consumer Price Index (CPI) increased 6.98% year-on-year, compared to 5.8% in January and 1.5% in February last year.

Electricity Tariffs Drive Surge

The biggest impact came from higher electricity prices after subsidy cuts and revised tariff structures.

Housing, water, electricity, gas & fuels index rose 9.65% annually

Electricity prices alone increased 10.03% month-on-month

These adjustments significantly burdened households already coping with high living costs.

Core Inflation & Interest Rates

Core inflation showed slight easing:

Urban core inflation: 7.1% (down from 7.2%)

Rural core inflation: Stable at 8.3%

The rise in CPI reduced real interest rates by around 120 basis points. The State Bank of Pakistan kept its policy rate unchanged at 10.5% last month.

Food Prices Mixed

Food inflation rose to 5.8%, up from 3.9% in January.

Major increases:

Tomatoes: +82%

Wheat: +42.6%

Wheat flour: +25.9%

Meat: +11.3%

Milk powder: +9.4%

Price declines:

Potatoes: -40%

Chicken: -21.8%

Gram pulse: -21.7%

Onions: -17%

Wholesale Pressure Rising

The Wholesale Price Index (WPI) increased to 1.0%, signaling growing producer-level cost pressures that could pass on to consumers in coming months.

External Risks Loom

Analysts warn that escalating Middle East tensions could:

Raise global oil prices

Increase Pakistan’s import bill

Pressure the rupee

Worsen inflation further

With millions of Pakistanis working in Gulf countries, any prolonged instability could also affect remittances — a key pillar of the economy.

Shop price inflation eased in February but consumers are still paying 3.5% more for food than a year ago, figures show.

Overall shop inflation fell slightly to 1.1% from January’s 1.5%, in line with the three-month average of 1.1%, as fierce competition between retailers kept price rises in check and customers benefited from promotions across health, beauty and fashion, according to the British Retail Consortium (BRC) and NIQ.

Prices of products other than food were down 0.1% year on year, a significant drop from January’s growth of 0.3%.

Overall food inflation fell slightly to 3.5% from 3.9% in January, while fresh food prices remained 4.3% higher than last February, a slight drop from January’s 4.4% and above the three-month average of 4.2%.

However falling global costs pushed ambient food inflation down to 2.3% – its lowest level in four years and a significant fall from January’s 3.1%.

BRC chief executive Helen Dickinson said: “Households got some welcome relief in February as shop price inflation eased.

“While the direction of travel is promising, prices are still rising, and many consumers remain under pressure.”

Mike Watkins, head of retailer and business insight at NIQ, said: “Since the start of the year, we have seen some competitive pricing across both the food and non-food channels which is helping to bring down inflation.

“Whilst the inclement weather and weak sentiment is making consumer demand rather unpredictable for retailers, at least shoppers are now seeing some of their cost-of-living pressures start to ease.”

The Chancellor has been urged to scrap the proposed hike in fuel duty as concerns have been raised about the conflict in the Middle East.

Rachel Reeves announced last year that the long-held discount in fuel duty would be scrapped from September, with a 1p hike followed by two increases of 2p each in subsequent years.

But following the US and Israeli attacks on Iran at the weekend – which killed the country’s Supreme Leader Ayatollah Ali Khamenei – concerns have been raised about the impact of oil price hikes which could hit consumers at the pumps.

Following the attack, the price of oil jumped to 80 US dollars a barrel, with some analysts suggesting it could rise above 100 dollars.

Speaking ahead of the spring statement, SNP economy spokesman Dave Doogan said: ““With real fears that prices at the pump are now set to soar because of the situation in the Middle East – instead of stubbornly doubling down, the Chancellor needs to scrap her price hike plans before motorists face a devastating double hit.

“Oil prices are already spiking – the last thing motorists and businesses now need is another damaging tax hike from the Labour Party.

“The Chancellor needs to see sense, recognise what is unfolding globally, and immediately scrap her plans to hike prices at pumps.

“Everyone knows that Keir Starmer’s Labour Party has broken their promise to cut energy bills by £300 – it would be another slap in the face for families if Labour made the cost-of-living crisis even worse with a plan that will inevitably increase prices.

“After 14 U-turns from this chaotic Labour Government – scrapping their plans to hike fuel duty is one U-turn motorists, businesses and families right across Scotland would actually welcome.”

A spokeswoman for the Treasury said: “We have extended the 5p fuel duty cut from this month to the end of August to support drivers across the country.”