Pakistan's Inflation Nears 11% Amidst Global Oil Price Surge

Pakistan's economic outlook remains precarious, with analysts warning of sustained double-digit inflation if global oil prices continue their upward trajectory amid the ongoing Middle East crisis. The combination of escalating energy costs and persistent import blockages is placing an immense burden on the nation's already fragile external accounts, according to a report by Dawn.

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Pakistan's economy is set to remain gripped by double-digit inflation if global oil prices continue to surge amid the persistent Middle East crisis, according to a report by Dawn.

Topline Securities Ltd's latest analysis paints a grim picture, projecting average inflation between 9-10% over the next year, with potential to exceed 11% in the fourth quarter of FY26. These figures are contingent on oil prices hovering around $100 per barrel, with every $10 increase adding approximately 0.5% to the inflation burden. Such inflationary pressures are expected to severely hamper economic expansion, prompting a downward revision of the GDP growth forecast for FY27 to a mere 2.5-3.0%.

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Analysts have warned that the combination of skyrocketing costs and obstructed imports is already placing an unbearable strain on the country's fragile external position.

The nation's current account deficit for FY27 could swell beyond $8 billion if stringent import controls are not maintained, further depleting critically low foreign exchange reserves. The fiscal deficit for FY26 is also projected to exceed IMF targets. Adding to the woes, the Pakistan Stock Exchange has become one of the world's worst performers, largely due to the country's heavy dependence on imported energy, which is forecast to consume $15 billion in FY26. This reliance, with 85% of energy requirements imported, has already contributed to a significant market plunge.

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under current conditions, inflation in Pakistan could average between 9 and 10 per cent over the next year, with fourth-quarter FY26 figures expected to exceed 11 per cent.

The economic forecast is further clouded by an anticipated 3.5% drop in remittances, with a notable 10% decline expected from the Gulf Cooperation Council region. Exports are also predicted to fall by 4%, and the national currency, the PKR, is forecast to depreciate to 298 against the USD by FY27. The persistent regional conflict poses a significant risk, potentially driving currency depreciation far beyond historical averages and leaving the PKR vulnerable.

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every USD 10 spike adds roughly 50 basis points to the inflation burden.