Street sees June inflation at 11.68%

June 30, 2026 (MLN): Pakistan’s headline inflation for June 2026 is set to ease modestly from May’s reading, according to a consensus of seven brokerage house estimates compiled by Mettis Global, even as base effects keep the year-on-year print elevated in double digits for a third consecutive month.

The average of forecasts from leading brokerage houses puts June CPI at 11.68%YoY, with a median estimate of 11.5% YoY, broadly steady against May’s 11.7% YoY reading, but still the second-highest print since the disinflation cycle began unwinding.

On a sequential basis, brokerages are split, with the average MoM change estimated at just 0.25%, masking a wide dispersion: Adam Securities sees a sharp 1.0% MoM rise on the back of Eid-led vegetable price spikes, while AHCML, AHL and Chase Securities all expect a marginal MoM decline, driven by falling transport costs as international oil prices normalize following the easing of Middle East tensions.

Topline Securities, whose 11.75-12.25%YoY range carries the widest band among the houses surveyed, expects this print to mark the highest monthly inflation in 24 months, while flagging that FY26 inflation will likely settle near 7.1% versus 4.5% in FY25.

Adam Securities, the most hawkish of the seven, attributes its 12.5%YoY call largely to base effects, noting the rise compared to May will likely stem from June 2025’s index level, which had recorded annual inflation of roughly 4.6%. The brokerage also flagged a sharp swing in food prices, projecting perishable food inflation near 12%MoM in June on the back of a roughly 42%MoM jump in fresh vegetable prices.

At the other end, Chase Securities is forecasting outright monthly deflation, pointing to a 5.85%MoM drop in the transport index on falling fuel prices as the dominant drag, even as food and non-alcoholic beverages rise 1.2%MoM. The brokerage estimates the implied real interest rate moving into positive territory at roughly +29bps, reinforcing the case for a prolonged policy hold.

Ismail Iqbal Securities struck a similar tone on the housing and transport drag, but cautioned that core inflation remains the more durable concern, with NFNE core projected to firm to 8.9%YoY in June from 8.8%YoY in May, arguing this points to a gradual rather than linear glide back toward the 5-7% medium-term target.

AHL pegged its full-year estimate broadly in line with official guidance, noting inflation is expected to average 7.04% during FY26, remaining in line with the government’s FY26 estimate of 7.1%, compared to 4.6% in the same period last year, while flagging core inflation (NFNE) for June projected at 8.7%YoY, an uptick from 7.5%YoY in June 2025.

Sherman Securities was the most direct on the policy implication, stating that with the expected inflation trend downward, a 50bps rate cut in the next MPC meeting is expected, projecting headline inflation easing toward the 8-9% range mainly due to elevated base and gradual easing effects of fuel rate cuts.

The brokerage consensus also lines up closely with the State Bank of Pakistan’s own reading of the inflation path. At its June 15 meeting, the Monetary Policy Committee (MPC) kept the policy rate unchanged at 11.5%, noting that headline inflation rose sharply from 7.3 percent in March to 10.9% in April and 11.7% in May, with core inflation also climbing to 8.7% in May from 8.2% in April.

The MPC attributed the acceleration to the low base effect compounded by the Middle East conflict, which fuelled inflation directly through higher domestic energy prices and indirectly via elevated transportation and production costs, while an unanticipated surge in wheat and wheat product prices added further pressure to food inflation over the past two months.

Crucially, the Committee’s own guidance mirrors the brokerage view that June marks a near-term peak rather than the start of a sustained climb: the MPC assessed that inflation may remain in double digits for the next few months, before gradually easing subsequently, toward its 5%-7% medium-term target.

The SBP flagged this outlook as subject to risks including geopolitical developments, the pass-through of global prices to domestic fuel, the magnitude of power and gas tariff adjustments, potential fiscal slippages, and weather-related uncertainty in food prices.

On the broader macro backdrop, the MPC noted that real GDP growth for FY26 is provisionally estimated at 3.7%, up from 3.2% in FY25, while SBP’s FX reserves rose to $17.2 billion as of June 5 and are projected to reach $18 billion by end-June 2026, aided by the completion of IMF reviews under the EFF and RSF facilities.

The government is targeting a primary balance surplus of 2.5% of GDP for FY26 and 2% for FY27, with the MPC reiterating the need for continued fiscal consolidation and structural reforms to broaden the tax base and reform public sector enterprises.

The secondary and primary debt markets appear to be running ahead of the brokerage consensus. At the June 23 T-Bill auction, cut-off yields fell sharply across all tenors versus the June 10 auction, with the government raising a total of Rs1,242.8 billion against bids skewed heavily toward the 12-month paper (Rs624.3 billion).

With brokerage houses now converging around an 11.2-12.5% range for June, and yields already pricing a steeper decline ahead, the SBP’s Monetary Policy Committee, which held the policy rate at 11.50% on June 15, looks set to face a more clear-cut decision at its next meeting, contingent on inflation continuing to soften toward the 8-9% range flagged across multiple desks for the coming quarter.

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