KARACHI: Pakistan’s annual inflation rate rose to its highest level in two years in May, driven by surging energy import costs linked to the war in the Middle East, official data showed Monday.
The consumer price index (CPI) rose 11.7% in May from a year earlier, according to the Pakistan Bureau of Statistics. That compares with 10.9% in April and marks the fastest pace since May 2024.
The reading was slightly below the median estimate of 12.2% in a Bloomberg survey of economists. On a month-on-month basis, prices increased 0.5% in May, slowing from a 2.5% rise in April.
The war in the Middle East has pushed up global energy prices, and Pakistan, a net importer of fuel, has been hit hard. For the country’s lowest-income households, record fuel prices have translated into an inflationary shock. Still, while the poorest are under immense strain, a deep culture of philanthropy and informal support in urban centers offers some cushion.
Urban inflation rose 11.8% year-on-year in May, up from 11.1% in April. Rural inflation stood at 11.5%, compared with 10.6% the previous month.
The Sensitive Price Index, which tracks essential goods, jumped 12.0% from a year earlier, accelerating from 10.1% in April. The Wholesale Price Index rose 12.7% annually, though it edged down 0.8% from April.
Core inflation, which strips out volatile food and energy prices, also climbed. In urban areas, the non-food non-energy measure rose 9.0% year-on-year in May, up from 8.0% in April. In rural areas, core inflation eased slightly to 8.4% from 8.5%.
Pakistan has been grappling with economic instability, including high debt, currency pressure and repeated energy crises.
The central bank has raised interest rates aggressively over the past two years but held steady at its last meeting. Analysts say sustained inflationary pressures may limit the scope for rate cuts in the near term.
