Pakistan Inflation Surges to Double Digits Amid Fuel Price Pressures

Consumer price inflation in Pakistan has rebounded to double digits after a brief respite, driven by rising fuel prices and their indirect impact. The headline inflation rate rose to 11.1 percent in August, up from 9.2 percent in July.

The increase is largely due to higher transportation costs, which recorded the largest monthly increase at 3.4 percent, while annual growth reached 20.2 percent. Elevated international petroleum prices remain a major concern, with refining crack margins also contributing to high domestic fuel prices.

Food inflation remains sticky, with prices rising 1.7 percent month-on-month, and core inflation staying within the 8-9 percent range for the fifth consecutive month at 8.8 percent for urban consumers and 8.5 percent for rural consumers.

The surge in wheat prices is particularly concerning, with a yearly increase of 87 percent for urban consumers and 73 percent for rural consumers. Higher international prices and low government stocks are keeping wheat prices elevated, which will likely continue to drag on overall food inflation.