Energy tariffs, food prices expected to lift Pakistan’s inflation in November

Pakistan’s headline inflation is expected to rise modestly in November as energy and food prices continue to push consumer costs higher, according to forecasts issued by Optimus Research and JS Global.

Optimus said it expects the national Consumer Price Index (CPI) to increase 0.8% month over month, taking headline inflation to 6.6% year over year in November. “The sequential increase is driven primarily by a 1.7% month-on-month jump in the housing index, led by upward adjustments in electricity tariffs, and a 0.6% uptick in the food index,” the firm said.

JS Global’s projection is broadly aligned, putting November headline inflation at 6.3% year over year, up from 6.2% in October. “Food inflation is set to rise 7.2% YoY, driven by higher prices of chicken, eggs and onions,” the brokerage said, adding that softer tomato prices “helped prevent an even sharper increase”.

Core inflation

Optimus expects core inflation to “normalize”, falling sharply to 7.3% year over year, down 0.6 percentage points from October. The firm attributed the deceleration to last year’s high base, “particularly due to sharp historical adjustments in footwear and health indices”, and noted that while seasonal increases are expected in woolen clothing and education, “overall monthly momentum remains contained at 0.4%.”

JS Global, however, projects core inflation at around 6.0% YoY in November and highlighted the persistence of underlying pressures. The brokerage noted that “core inflation has remained in the 7-9% range in recent months,” citing October’s urban core reading of 7.5% and rural core at 8.4%.

Energy and food trends

Optimus expects electricity prices to trend higher this month due to tariff adjustments. The expiry of the previous negative PKR 1.89/kWh quarterly tariff adjustment should result in “a net ~6.5% month-on-month increase in electricity prices,” the firm said. A 4.5% rise in firewood prices is also seen contributing to the housing index’s climb.

Food inflation is forecast to show mixed movements. Optimus noted a 0.6% monthly rise in the food index, with wheat prices up 2.7% and sharp volatility in perishables. “Onion prices jumped 56% month-on-month, though this was largely neutralized by a steep drop in tomato prices,” the firm said, adding that chicken and egg prices surged 15% and 9%, respectively.

Policy outlook

Both research houses expect monetary policy to remain steady in the near term.

JS Global said the State Bank of Pakistan is likely to hold the policy rate at 11%, citing the central bank’s recent decision to maintain its stance amid flood-related supply disruptions. “Floods have triggered a temporary yet significant supply shock, especially in agriculture, heightening risks of elevated inflation and a wider current account deficit in FY26,” the brokerage said. For the upcoming December policy meeting, “we do not see any scope for a rate adjustment.”

Optimus also expects stable policy, noting that while year-over-year inflation may edge higher in the coming months due to base effects, month-on-month momentum should remain contained.

With 12-month forward real interest rates near 3%, the firm sees spreads “gradually compressing toward ~1% by June 2026”, supporting monetary stability through FY26.