September CPI seen at 10.39%

October 01, 2026 (MLN): Pakistan’s headline inflation is projected to ease to 10.39% YoY in September 2026, according to Mettis Global’s estimate, slowing from 11.1% in August but remaining firmly in double digits as higher energy and transport costs offset a decline in food prices.

On a monthly basis, CPI inflation is estimated to rise around 1.1% MoM, reflecting continued pressure from electricity, petroleum and other energy-related prices during the month.

The September reading would mark a moderation in annual inflation primarily due to the high base effect, while the monthly increase points to persistent underlying price pressures in the domestic economy.

The key driver during the month was the rise in energy costs. Electricity prices increased sharply following the application of a higher Fuel Charges Adjustment (FCA) of Rs2.06/kWh, compared with Rs0.75/kWh in August, alongside a Quarterly Tariff Adjustment (QTA) of Rs0.52/unit.

Higher fuel prices also added to transport costs, with retail petroleum prices rising during the month amid elevated international oil prices and disruptions to global energy supply.

The impact of energy and transport inflation was partly offset by softer food prices, particularly perishables. A decline in prices of vegetables, fresh fruits, potatoes and poultry provided some relief to the overall CPI basket.

However, the improvement in food inflation is unlikely to fully neutralize the impact of higher energy costs, given the significant weight of housing, utilities and transport in the CPI basket.

The latest brokerage estimates compiled by Mettis Global place September inflation at an average 10.22% YoY, with a median estimate of 10.20%, while monthly inflation is estimated at 1.11% on average.

Forecasts range from around 9.3% to 10.5% YoY, highlighting uncertainty around the extent of energy and transport pass-through into the headline index.

The inflation outlook remains closely linked to international oil prices and disruptions along key maritime trade routes, particularly the Strait of Hormuz and Bab-el-Mandeb. Prolonged supply disruptions could keep energy costs elevated and increase the risk of second-round effects across transportation, freight and other services.

At the same time, the high base effect from the previous year is expected to continue providing statistical relief to headline inflation in the coming months.

Headline CPI had risen from 9.2% YoY in July to 11.1% in August, while the average inflation for the first two months of FY27 stood at 10.2%.

The State Bank of Pakistan, which kept its policy rate unchanged at 11.5% on September 14, has identified elevated crude oil prices, power and gas tariff adjustments and weather-related risks as key upside risks to the inflation outlook.

The central bank expects inflation to return toward its 5–7% medium-term target by June 2027, provided supply-side shocks do not result in persistent second-round effects.

With September inflation still expected to remain above 10%, the upcoming CPI reading will provide an important gauge of the extent to which the recent energy shock is feeding into broader consumer prices.

Mettis Global’s own estimate of 10.39% YoY therefore stands 17bps above the street average and 19bps above the median, placing the in-house forecast toward the upper end of market expectations.

The higher Mettis estimate reflects the continued impact of elevated energy and transport costs, particularly the sharp increase in electricity charges following the higher Fuel Charges Adjustment and Quarterly Tariff Adjustment, while softer food prices are expected to provide a partial offset.

The official September CPI data is expected to clarify whether the decline in annual inflation is accompanied by a meaningful moderation in monthly price momentum or remains largely a base-effect driven improvement.

Copyright Mettis Link News