Rising Energy Costs Push Pakistan Inflation to Two-Year Peak

ISLAMABAD: (Web Desk) – Pakistan’s inflation rate climbed to its highest level in two years during May, driven largely by rising energy import costs linked to ongoing tensions in the Middle East.

According to data released by the Pakistan Bureau of Statistics on Monday, the Consumer Price Index (CPI) increased by 11.7 percent year-on-year in May, compared with 10.9 percent recorded in April.

Although inflation accelerated sharply, the latest figure remained slightly below economists’ expectations, with analysts surveyed by Bloomberg projecting a median reading of 12.2 percent.

The increase reflects growing economic pressure on fuel-importing countries across Asia, where higher global energy prices have contributed to inflationary trends and placed additional strain on external accounts.

In response to mounting inflation risks, the State Bank of Pakistan raised its benchmark interest rate in April for the first time in nearly three years. The central bank is scheduled to hold its next monetary policy meeting on June 15.

Food inflation also edged higher, with prices rising 7.9 percent in May compared with 7.6 percent in April, indicating continued pressure on household budgets.

Meanwhile, housing and energy costs increased by 16.8 percent year-on-year, maintaining a pace similar to the previous month and remaining among the key contributors to overall inflation.

Since the outbreak of conflict in the Middle East, authorities have revised domestic fuel prices upward multiple times. Current petrol prices are approximately 48 percent higher than pre-conflict levels, while diesel prices remain around 38 percent above earlier rates.

Economists warn that sustained increases in fuel and energy costs could continue to influence inflation, consumer spending and broader economic stability in the coming months.