Pakistan September inflation seen easing but energy pressures persist

Pakistan’s consumer price inflation is expected to ease to around 10% in September from 11. 15% a month earlier, brokerage houses said, but rising fuel and electricity costs are expected to keep price pressures elevated and complicate the central bank’s policy outlook. September inflation is projected at between 9. 9% and 10. 5% year-on-year, according to estimates from Topline Securities, Ismail Iqbal Securities, Abbasi and Company and Growth Securities, compared with 11. 15% in August and 5. 61% in September last year. The country’s headline inflation clocked in at 11. 1% on a year-on-year (YoY) basis in August 2026, up from 9. 2% recorded in July, as shown by Pakistan Bureau of Statistics (PBS) data on Tuesday. Topline Securities expects inflation at 10. 25-10. 3% year-on-year and 1. 3% month-on-month, with fuel prices estimated to have risen 6. 5% during the month. “Electricity prices on a MoM basis have increased by 9. 58% while Liquefied Petroleum Gas (LPG) price registered an increase of 2. 61%. “The increase in electricity charges in Sep 2026 is mainly attributable to the higher Charges Adjustment (FCA) of Rs2. 0581/kWh vs. Rs0. 7503/kWh in Aug 2026, along with positive Quarterly Tariff Adjustment (QTA) of Rs0. 5194/kWh, ” said Topline. Ismail Iqbal Securities expects September inflation at 10. 5% year-on-year and 1. 4% month-on-month, saying energy accounted for a larger share of the increase while food pressures eased. “Housing contributes around 55bps. Almost all of it comes from a 12. 6% rise in electricity charges, as the negative quarterly adjustment drops out and a larger monthly fuel charges adjustment feeds through, with LPG adding a little more. Transport adds a further 35bps on a 7. 3% rise in motor fuel, after daily price revisions pushed petrol and diesel sharply higher through the first half of the month, ” said Ismail Iqbal Securities. Food is expected to contribute about 25 basis points, with onion prices rising 32% during the month and fresh vegetables remaining firm. “The month’s mix is more important than the headline number, ” Ismail Iqbal Securities said, noting that food accounted for almost half of August’s inflation, while the contribution from energy is now expected to rise to more than a quarter from about a sixth. “The difference matters. Food spikes like this usually reverse once supplies return to normal, but higher fuel and power prices tend to stay, and over time they push up transport fares, freight costs and core inflation, ” said the brokerage house. Meanwhile, Abbasi and Company expects September national CPI inflation at 10. 2% year-on-year and 1. 1% month-on-month. It said food inflation could remain elevated, with higher prices of wheat flour, meat, rice, fresh milk, cooking oil and vegetable ghee contributing to the increase in the food index. The brokerage also cited higher motor fuel, transport and housing costs as factors pushing inflation upwards. “Inflation is expected to remain elevated, primarily due to supply disruptions caused by the closure of the Strait of Hormuz and Bab-el-Mandeb amid renewed geopolitical tensions. Higher fuel prices are likely to exert significant upward pressure on transportation costs, while increased electricity and LPG charges are expected to drive further gains in the housing index, ” it warned. Growth Securities has the lowest forecast among the four brokerages, projecting September inflation at 9. 9% year-on-year and 0. 8% month-on-month. “The impact of higher fuel prices is expected to be slightly mitigated by lower food prices, ” it said. It expects the transport index to rise 0. 7-0. 75% month-on-month after average petrol prices increased 16. 9% to Rs393. 41 a litre and high-speed diesel prices rose 12. 3% to Rs423. 47. “We expect CPI to remain in the 9-10% range till March 2027 if average fuel prices remain in Rs390-400/liter levels and FY27 average to be 9-9. 5%, ” said the brokerage house. The inflation outlook is also putting the State Bank of Pakistan’s monetary policy stance under scrutiny. The central bank kept its policy rate unchanged at 11. 5% this month. Ismail Iqbal Securities expects another hold at the upcoming meeting in October and “sees no change before the end of CY26”. On the other hand, Growth Securities “expects the Monetary Policy Committee of SBP to increase policy rate by 50-100 bps in the upcoming Oct 26, 2026 meeting if fuel prices remain elevated”.

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