Pakistan's Inflation Eases to 10.3% in September, Still Double Digits for a Second Month

Pakistan's headline inflation eased to 10.3% year-on-year in September 2026, the Pakistan Bureau of Statistics reported on October 1, down from 11.1% in August but still the second consecutive month in double digits.

The numbers

The Consumer Price Index rose 1.3% month-on-month in September, a touch faster than the 1.2% monthly increase recorded in August. Urban inflation came in at 10.1% year-on-year, while rural inflation ran higher at 10.5%, continuing a pattern this year in which rural households have generally faced a steeper cost-of-living climb than urban ones.

The easing from August's 11.1% keeps inflation within the range the government had projected going into the month, but it does not change the broader trend: after dropping to a low of 9.2% in July, inflation returned to double digits in August and has stayed there since.

What's driving the number

Housing and utility costs have been the single biggest contributor to the headline figure for months, with electricity charges doing most of the damage — tariffs have been running tens of percentage points higher year-on-year for much of 2026 as the government works through the energy sector's circular-debt problem rather than absorbing the cost itself. We've covered that dynamic in detail in our explainer on Pakistan's circular debt.

Food inflation, by contrast, has been a comparatively smaller driver in recent months, even as specific items like onions and fresh vegetables have seen sharp price swings. That marks a shift from earlier in the year, when food costs were the dominant story in weekly price data — a pattern we tracked in our coverage of the late-September electricity-driven spike in the weekly inflation gauge.

The policy backdrop

Speaking after the data was released, Prime Minister Shehbaz Sharif called for the government to shift its focus from economic stabilisation toward growth, job creation and export promotion — language that signals Islamabad believes the worst of the post-2023 inflation shock is behind it, even if the headline rate remains well above the central bank's medium-term comfort zone.

That claim will be tested at the State Bank of Pakistan's next Monetary Policy Committee meeting. The SBP has held its policy rate steady through its recent meetings, weighing persistent double-digit inflation against pressure from businesses and the government to cut borrowing costs further and support growth — a balancing act we examined in our coverage of the September rate hold.

Why it matters for households

A headline rate near 10% does not land evenly. Electricity-heavy household budgets are absorbing most of the pain right now, while the relative calm in food prices is giving some relief to lower-income households whose spending is weighted more heavily toward groceries than utility bills. For a broader look at how Pakistan's inflation story has evolved since the acute crisis years, see our explainer on the cost-of-living crisis.

With the first quarter of the new fiscal year now closed, the September reading sets the baseline against which the rest of FY27's inflation trajectory will be measured — and whether the government's call to pivot toward growth holds up will depend largely on whether utility and energy costs, rather than food, keep driving the number for the rest of the year.

Build Better Pakistan's Economy Desk tracks monthly CPI data and its effects on monetary policy and household budgets.