Pakistan’s inflation outlook is showing renewed signs of pressure, with consumer prices expected to return to double-digit growth in August 2026 after briefly remaining below the 10% mark in July.
Market analysts believe rising food and transportation costs will be the biggest contributors to the expected increase. AKD Research has estimated August inflation at around 11.4% year-on-year, while Topline Securities expects inflation to remain in the range of 10.75% to 11.25%.
The forecasts compare with July’s inflation rate of 9.21%, indicating a significant monthly and annual acceleration in price pressures.
Food prices emerge as a major concern
Food inflation is expected to remain one of the strongest drivers of the overall increase in consumer prices.
AKD Research expects food prices to be approximately 14.8% higher than a year earlier. Disruptions caused by monsoon weather and transportation problems are expected to put additional pressure on food supplies.
Several important food items are likely to see sharp monthly increases. Onion prices, in particular, are estimated to rise by almost 60% during August under AKD’s forecast.
Eggs and gram pulse are also expected to become more expensive, while wheat and wheat flour prices are projected to increase as well.
Topline Securities has reached a similar conclusion, forecasting higher prices for onions, eggs, gram pulse and wheat.
However, some products could move in the opposite direction. AKD expects tomato and moong pulse prices to decline during the month.
Transport costs add to inflation
Transportation is another major source of inflationary pressure.
AKD expects the transport index to increase by approximately 2.9% month-on-month, largely because of higher fuel prices. Motor spirit is estimated to become around 3.6% more expensive, while high-speed diesel could see a much larger increase of approximately 15.3%.
Topline Securities also expects transportation costs to rise, citing higher international oil prices and changes in dealer margins.
The increase in fuel prices could affect more than just motorists. Higher transportation costs can gradually raise the prices of food and other goods because of increased distribution and delivery expenses.
Utilities remain uncertain
There is some disagreement between the two brokerage houses regarding the outlook for housing and utility costs.
AKD expects the housing index to fall further in August, primarily because of lower electricity charges. The brokerage expects the Fuel Charges Adjustment to ease compared with the previous month.
Topline, however, expects the housing, water, electricity and gas category to increase slightly. It forecasts higher electricity charges, although a decline in LPG prices could provide some relief.
These differences demonstrate how electricity tariff adjustments and energy prices could influence the overall inflation reading.
Monthly inflation also expected to rise
The increase in prices is expected to be visible not only in the year-on-year inflation rate but also on a monthly basis.
AKD forecasts a 1.3% month-on-month increase in overall inflation, which would represent the strongest monthly rise in four months.
Topline has estimated a somewhat lower increase of around 1.06%.
Food prices are expected to account for a significant portion of this monthly increase, while transportation costs are also likely to contribute.
Impact on real interest rates
The expected rise in inflation could have implications for Pakistan’s interest-rate environment.
Topline estimates that if inflation remains between 10.75% and 11.25%, real interest rates could fall to approximately 25 to 75 basis points.
This would be considerably below Pakistan’s historical average of around 200 to 300 basis points.
A significant decline in real interest rates could become an important consideration for monetary policymakers as they assess the balance between supporting economic activity and controlling inflation.
What should consumers expect?
The latest projections suggest that the improvement seen in inflation during July may not continue smoothly.
Food supply disruptions, higher fuel costs, international oil prices and changes in electricity tariffs could all influence household expenses in the coming months.
For ordinary consumers, the most immediate pressure is likely to come from essential items such as food and transportation. If these increases persist, they could also affect the prices of other goods and services.
Outlook for Pakistan’s inflation
Pakistan’s return to potentially double-digit inflation in August highlights how quickly price pressures can change.
Although inflation has declined substantially from the extremely high levels witnessed during earlier periods, the latest forecasts show that the economy remains vulnerable to food shortages, energy-price movements and external commodity shocks.
The August CPI figure will therefore be closely watched by businesses, consumers, investors and policymakers. Whether the increase proves temporary or develops into a longer-lasting trend will depend heavily on food supply conditions, fuel prices, electricity adjustments and broader economic developments.