Pakistan's short-term inflation, measured by the Sensitive Price Indicator (SPI), increased 4.23% year-on-year in the week ended February 26, 2026, reflecting continued pressure from food staples and energy costs despite recent weekly relief in perishable items.
Official data released by the Pakistan Bureau of Statistics (PBS) showed that the annual SPI inflation was driven by sharp increases in wheat flour (29.51%), gas charges for Q1 (29.85%), electricity charges (17.33%), tomatoes (16.83%), powdered milk (10.16%) and bananas (11.73%). Meat prices also remained elevated, with beef up 11.69% and mutton 8.98% compared to the same week of last year.
However, several essential food items remained cheaper than a year earlier, partially offsetting inflationary pressures. Prices of potatoes were down 52.55% YoY, chicken 29.55%, garlic 26.18%, onions 25.71% and eggs 16.22%, indicating a significant correction from last year's supply shock-driven highs.
On a weekly basis, the SPI fell 0.54% during the week under review, mainly due to steep declines in tomatoes (-29.67%), potatoes (-10.62%), chicken (-9.03%) and onions (-7.44%). Wheat flour, bread and sugar also recorded modest reductions, suggesting easing pressure in the most recent price cycle at the beginning of Ramazan.
Across income segments, the annual SPI inflation remained uneven. The lowest consumption quintile faced 4.37% YoY inflation, while the second quintile experienced the highest increase of 5.66%. Inflation moderated progressively for higher-income groups, reaching 3% for the top quintile, indicating relatively heavier cost-of-living pressure on lower- and middle-income households.
The SPI trends signal that food and utility tariffs continue to anchor Pakistan's short-term inflation outlook, even as volatile perishables provide intermittent relief. The persistent YoY increases in wheat flour and energy charges underscore the structural component of inflation linked to administered prices and staple supply chains.
Looking ahead, the Consumer Price Index (CPI) for February 2026 is expected to pick up. According to Arif Habib Limited (AHL), the headline CPI is projected at 7.2% YoY in Feb'26, compared with 1.5% YoY in Feb'25, largely reflecting a low base effect from last year.
On a month-on-month basis, the inflation is forecast to rise 0.5%, driven by food, transport and housing indices amid higher electricity and fuel costs.
Core inflation – non-food, non-energy – is estimated at 8% YoY in Feb'26, easing from 9% a year earlier. On a cumulative basis, the average CPI inflation for the first eight months of FY26 is expected to reach 5.4%, down from 6% in the same period of last year, while the average core inflation is projected at 7.5% versus 10.4% previously.
Category-wise, the February CPI inflation is expected to remain broad-based, with notable increases in food (7.2%), housing (8.3%), education (10.2%), health (6.8%), clothing and footwear (5.8%), restaurants and hotels (5.3%) and miscellaneous items (18.4%), reinforcing the view that price pressures remain entrenched.
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