ISLAMABAD: Pakistan’s inflation surged to 7 percent in February 2026, the highest since October 2024, as sharp electricity price hikes from subsidy cuts hammered households, while escalating unrest in the Middle East threatened to push global oil prices higher, risking fresh pain for an import-reliant economy.
The consumer price index (CPI) rose 6.98 percent year-on-year, accelerating from 5.8 percent in January 2026 and just 1.5 percent a year earlier in February, according to the Pakistan Bureau of Statistics.
Electricity tariffs delivered the biggest blow after cross-subsidies were scrapped and fixed charges imposed. The housing, water, electricity, gas and At 7pc, inflation hits 16- fuels index jumped 9.65pc annually and 1.86pc in the month, with electricity alone surging 10.03 percent from January. Core inflation, which excludes volatile food and energy prices, reduced slightly. Urban core inflation reduced to 7.1pc from 7.2pc, though it was below 7.8 percent recorded in February 2025. Rural core inflation remained stable at 8.3 percent as last month, compared with 10.4 percent a year earlier in February 2025.
The uptick in CPI shrank real interest rates by 120 basis points. The State Bank of Pakistan kept its policy rate unchanged at 10.5 percent last month, resisting calls for a cut. Yet the eight-month average for fiscal 2026 stands at 5.46 percent, still below last year’s 5.85 percent, and falls inside the government’s 6-7 percent forecast band.
Another indicator, the Wholesale Price Index (WPI) jumped to 1.0 percent during the month under review, up from 0.2 percent in the previous month and 0.7 percent in February 2025. It suggesting that cost pressures at the producer level is to increase and could translate into costlier retail inflation in the coming months, as WPI typically feed into consumer prices with a lag.
Analysts said the February spike highlights lingering risks from domestic energy reforms, now amplified by Middle East tensions that could spike Pakistan’s oil import bill, weaken the rupee and drive inflation higher in coming months. With millions of Pakistanis working in Gulf states, any escalation also risks disrupting remittances, a key economic lifeline, and could fuel public discontent at a time when households are already squeezed by power bills and stagnant wages.
During February, food and non-alcoholic beverages recorded inflation of 5.8 percent , up from 3.9 percent a month earlier, while housing and utilities rose 9.65 percent compared to 7.29 percent in January. Inflation in miscellaneous goods and services climbed to 23 percent from 20.97 percent .
Some staple food items year-on-year recorded notable increases. Tomatoes prices surged 82pc, wheat 42.6 percent , wheat flour 25.9 percent , butter 16 percent , fresh fruits 13 percent , condiments and spices 12.87 percent . Price of meat increased 11.3 percent , milk powder 9.4 percent , dry fruits 8.1 percent , gur 8.03 percent , wheat products 7.4 percent , rice 5.3 percent and eggs 5.15 percent over same month last year.
In contrast, several food categories posted sharp declines, helping offset the impact on overall food inflation. Potato prices plunged 40 percent , chicken 21.8 percent , gram pulse 21.7 percent , Besan 19.9 percent , onions fell 17 percent, Masoor pulse declined 11 percent , tea 8.6 percent, mash pulse 4.9 percent and fresh vegetables 3.9 percent .
In non-food segment, gas charges increased 22.9 percent, postal services 12.6 percent , newspapers 11.9 percent, liquified hydrocarbons 11.6 percent and education 8.78 percent.
