Pakistan inflation slowed to 10.3 percent in September from 11.1 percent in August, but analysts expect the State Bank of Pakistan (SBP) to keep its tight monetary policy in place as prices remain high and the mid-term inflation target looks out of reach.
Food Prices Ease While Non-Food Inflation Rises
According to the Pakistan Bureau of Statistics, as reported by Dawn, the decline was driven mainly by food. Urban food inflation dropped to 8.1 percent from 12.1 percent, while rural food inflation fell to 7.7 percent from 13.2 percent. Non-food inflation, however, moved the other way, rising to 11.5 percent in urban areas and 13.1 percent in rural areas.
Energy and Transport Costs Still Weigh on Households
In urban areas, electricity charges were up 15.28 percent year-on-year, motor fuel 10.76 percent and transport 27.43 percent. Prices still rose 1.3 percent month-on-month in September, and the annual rate remains far above the 5.8 percent recorded in September 2025.
Weekly Data Shows Continued Pressure
The Sensitive Price Index rose 11.53 percent year-on-year in the week ended October 1, with onions up 114.20 percent, LPG up 66.59 percent and electricity up 58.59 percent over a year earlier, Dawn reported. Tomatoes and potatoes, by contrast, were down 45.52 percent and 39.54 percent.
What Pakistan Inflation Means for SBP Policy
The SBP’s policy rate stands at 11.5 percent, which leaves the real interest rate only modestly positive. Dawn reported that one-year T-bill yields rose by 75 basis points to 12.49 percent in the latest auction, which some market participants read as a sign that rates could go up rather than down.
The Monetary Policy Committee is scheduled to meet on October 26. With Pakistan inflation still above the central bank’s medium-term target range of 5 to 7 percent, analysts expect the SBP to stay cautious, even though the pace of price increases has slowed.
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