Pakistan's Consumer Price Index (CPI) inflation fell to 4.8% year-on-year in February 2026, down from 5.3% in January. This marks the first time inflation has dipped below 5% since early 2023, a significant milestone in the country's economic stabilization journey.
What's Behind the Drop?
- Food prices: Stable wheat and vegetable supply kept food inflation at 3.2%
- Energy: Government absorbed some energy cost increases through subsidies
- Base effect: High inflation readings from 2025 are rolling off the comparison
- Rupee stability: PKR holding steady around Rs. 280/USD reduced import costs
Impact on Consumers
While headline numbers look encouraging, Pakistanis still feel the pinch of elevated prices — the CPI basket is now 65% higher than three years ago. Essential items like milk, cooking oil, and rent remain significantly more expensive than pre-2022 levels. The real relief will come when wage growth consistently outpaces inflation.