Pakistan’s inflation is expected to rise to 7.4% year-on-year in February 2026, the highest in 18 months, according to Optimus Capital Management. The brokerage said pressures from rising electricity tariffs and gold prices are key contributors. The report highlights growing concerns over the country’s cost of living and economic stability.
Optimus Capital projects headline NCPI to increase 0.7% month-on-month in February, pushing annual inflation from 5.8% in January to 7.4% YoY. The report attributes the uptick to base effects, adjustments in electricity tariffs, and rising commodity prices, signaling an acceleration phase. Analysts noted the food index may ease slightly by 0.4% MoM, partially offsetting pressure on households.
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Core inflation is forecast to rise to 7.9% YoY, reversing a recent low of 7.2% recorded in August 2025. Inflation in Pakistan has historically been volatile, peaking at 38% in May 2023 before dropping into single digits by September 2024. The recent rebound reflects renewed upward pressure on prices and rising costs across essential sectors.
Optimus Capital expects headline CPI to trend higher through fiscal year 2026, potentially reaching 9-10% YoY by June, with the strongest month-on-month increase projected in March. Seasonal factors such as Ramadan demand, higher crude oil prices amid geopolitical tensions, and positive adjustments in electricity charges are cited as main drivers. Softer global oil prices and PKR stability may moderate overall inflationary pressures.
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The brokerage estimates FY26 average inflation at 6.7% YoY, within the State Bank of Pakistan’s 5–7% target, implying a 12-month forward real interest rate of approximately 2.6% in February. Policymakers are expected to monitor these trends closely to balance inflation control with economic growth.