Reporting snapshot · 3 November 2026 (Asia/Karachi). These are the October figures published on 2 November, and they describe prices during October rather than the weeks since. November's fuel, electricity and wheat decisions are not in the reading, and the Pakistan Bureau of Statistics does not publish a forward inflation forecast with its monthly review, so the FY27 average will move as the remaining months arrive.
What the October figures show
Pakistan’s headline consumer price inflation slowed to 9.6 per cent year-on-year in October from 10.3 per cent in September, the Pakistan Bureau of Statistics said in its Monthly Inflation Report for October 2026. The reading remains above the 6.2 per cent recorded in October 2025, and prices rose 1.1 per cent during October itself, Profit by Pakistan Today reported, slower than September’s 1.3 per cent monthly increase but still an increase rather than a decline.
The urban and rural readings moved in the same direction at different speeds. Urban inflation eased to 9.5 per cent year-on-year from 10.1 per cent, while rural inflation slowed to 9.8 per cent from 10.5 per cent, according to the bureau’s data as reported by Profit. Rural prices rose 1.5 per cent month-on-month, faster than the 0.8 per cent recorded in urban areas, so the improvement in the annual rate has not yet reached every household’s weekly shopping.
The four-month picture is less comfortable. Average inflation for July to October, the first four months of FY27, stood at 10.05 per cent, against 4.79 per cent in the same period a year earlier, Profit reported. That average is the figure that will be measured against the budget’s 8.2 per cent target for the year, and it is the one that will decide whether October’s single month is a turning point or a pause.
October’s print landed inside the finance ministry’s projected range of 9.5 to 10.5 per cent for the month. It was also close to what brokerage houses had expected: Topline Securities projected 9.0 to 9.5 per cent and Insight Securities 9.3 per cent, Profit reported.
Why the headline rate fell
Two groups did most of the work. Food inflation slowed to 7.8 per cent in urban areas from 8.1 per cent and to 7.1 per cent in rural areas, while the energy group decelerated to 10.6 per cent in urban areas and 12.1 per cent in rural areas, The Express Tribune reported, citing the bureau’s bulletin.
The comparison with a year earlier also matters. October 2025 recorded inflation of 6.2 per cent, so part of the fall in the annual rate reflects the base against which this October is measured rather than a sudden drop in prices. The finance ministry had warned that the outlook would stay sensitive to international energy prices, food supplies and base effects, according to Profit.
Food prices themselves were mixed. Onion prices were 82 per cent higher than a year earlier and wheat 39 per cent higher, with wheat flour up 35 per cent, The Express Tribune reported. Tomatoes, potatoes, sugar, eggs and pulses were cheaper than a year earlier, by between 10 and 55 per cent, a movement the newspaper linked to the closure of the border with Afghanistan and the suspension of trade that followed. Imported fruit from the western neighbour became more expensive.
Fuel and power remained the largest single pressure on the index. Petrol was 42 per cent more expensive than in October 2025 and rose 3 per cent during the month, while transport services were up 27 per cent year-on-year, electricity tariffs 23 per cent and motor vehicle taxes 39 per cent, according to the bureau’s figures as reported by The Express Tribune. The national price survey put the per-litre petrol price at Rs379 in the final week of October and high-speed diesel at Rs402.
What it means for the 12% policy rate
The State Bank of Pakistan raised its policy rate by 50 basis points to 12 per cent on 26 October, as KhabarWire reported, citing the risk that elevated food and energy inflation could feed into expectations. The central bank’s monetary policy page confirms the 12 per cent policy rate and its medium-term inflation target of 5 to 7 per cent, a band October’s 9.6 per cent reading remains well outside.
The case for the increase rested partly on core inflation, which strips out volatile food and energy prices. That measure eased for a second consecutive month to 7.5 per cent in October, from 7.8 per cent in urban areas and 7.1 per cent in rural areas, after peaking at 8.8 per cent in August, The Express Tribune reported. The newspaper noted that the gap between core inflation and the 12 per cent policy rate has widened to 4.5 percentage points, a spread that helps commercial banks’ margins while raising the cost of government borrowing.
The monetary policy statement quoted by The Express Tribune acknowledged the tension: “There is a risk that elevated food and energy inflation may further increase inflation expectations, which may seep into core inflation going forward.” The same statement pointed to the Middle East conflict and domestic wheat supply frictions as the two factors keeping inflation elevated.
For borrowers, the practical effect is that October’s lower headline number has not yet changed the cost of credit. The next Monetary Policy Committee meeting is scheduled for 14 December, according to the central bank’s published calendar, and the minutes of the October meeting are due on 20 November.
Where the forecast stands
The official forecasts have not converged. The IMF raised Pakistan’s inflation forecast to 9.9 per cent for FY27, above the government’s 8.2 per cent target, while the Planning Commission has projected 7.5 per cent, The Express Tribune reported. Topline Securities has warned that average inflation could exceed 9 per cent this year if international oil prices stay between $100 and $110 a barrel, against its earlier projection of 8.5 to 9 per cent, according to Profit.
Wheat is the other variable. The government is importing 765,000 tonnes of wheat after what The Express Tribune described as serious wheat management issues, and the bureau’s data show wheat and flour prices still running well above last year. The support price, the release of provincial stocks and the pace of imports will shape whether food inflation keeps slowing, as KhabarWire set out when the wheat policy was revised.
KhabarWire’s October essentials-price check found the weekly basket of 51 items 11.32 per cent more expensive than a year earlier, a reminder that the headline index and the household shopping basket do not move in lockstep. September’s reading, by contrast, was 10.3 per cent, as reported at the time.
What is still uncertain
The first open question is whether core inflation keeps falling. The central bank raised rates precisely because it expected food and energy costs to spread into the rest of the basket; two months of easing in the core measure weaken that argument but do not settle it, particularly with petrol still 42 per cent above its level a year earlier.
The second is oil. October’s reading reflects a month of elevated crude prices; since then the government has been using refinery contributions to hold pump prices down, as KhabarWire reported. A renewed spike tied to the Middle East war or the Strait of Hormuz would feed through transport and power costs within weeks, and Topline’s oil-price scenario shows how quickly the FY27 average could move.
The third is the base. October 2025 was itself a low-inflation month at 6.2 per cent, which flatters the year-on-year comparison; as the base changes over the next two releases, the same monthly price changes could produce a less flattering annual rate. The bureau’s monthly review is a snapshot of one month’s price survey, not a forecast, and the finance ministry’s monthly outlook will be the next official read on whether October’s easing persists.
