MediumIV Macro Policy & Sovereign Debt2 November 2026, Monday
Pakistan's consumer inflation eases as wholesale prices accelerate
The Pakistan Bureau of Statistics put October inflation at 9.6% year on year on 2 November, down from 10.3% in September. The figure came in slightly above the 9.5% expected in a Bloomberg survey, while the wholesale price index accelerated to 13.8%.
Prices rose 1.1% on the month, against 1.3% in September and 1.7% in October last year. The annual rate was 9.5% in urban areas and 9.8% in rural areas. Data compiled by ProPakistani show core inflation, which excludes food and energy, easing from 8.6% in September to 7.8%. Average inflation in the first 4 months of the fiscal year was 10.05%, against 4.79% a year earlier.
The signal lies in wholesale rather than headline prices. The producer-side index rose from 13.3% in September to 13.8%, against 1.1% a year earlier. The 4.2-point gap suggests fuel and electricity costs have not yet fully passed through to consumers. Topline Securities expects the fiscal-year average to exceed 9% if oil stays at 100–110 dollars a barrel.
The central bank raised its policy rate by 50 basis points to 12% on 26 October. With headline inflation at 9.6%, the real rate is about 2.4 points; measured against wholesale prices, it is negative. The Finance Ministry had projected a range of 9.5–10.5% for October, and the outturn landed at the lower end.
Talay assessment
Bottom line
The headline decline looks reassuring, but wholesale prices at 13.8% show the pass-through of energy costs to consumers is not finished. With the policy rate at 12%, the real return is thin. While oil stays above 100 dollars, another hike remains on the central bank's table.
Likely effects
- Monetary policyNegative1–6 months
A 4.2-point gap between wholesale and consumer prices makes it harder for the central bank to return to cuts, and the risk of a further hike persists.
- Household budgetsNegativeWeeks
A rural rate of 9.8% and a 1.5% monthly rise hit households whose baskets are weighted towards food and energy hardest.
- Turkish exportersUncertain1–6 months
Pressure on real incomes in Pakistan limits demand for textile and machinery exports; the effect is small and indirect.
Possibilities, ranked
- 1Sideways drift50%
The headline holds in the 9–10% band and the central bank keeps rates on hold in December.
Watch: November CPI and the December monetary policy decision
- 2Pass-through accelerates35%
Wholesale prices feed through to consumers, the headline climbs back above 10% and a further hike follows.
Watch: Electricity and fuel tariff adjustments in November
- 3Rapid disinflation15%
Oil prices fall, the headline drops below 9% and a debate over rate cuts begins.
Watch: January ICE Brent falling durably below 100 dollars
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- CPI, annual▼ 9.6%
- Wholesale prices, annual▼ 13.8%
- Core inflation▲ 7.8%