Inflation at 4.18% keeps cost-of-living elevated

The Sensitive Price Indicator (SP I) has increased 4.18% year-on-year, reinforcing concerns over Pakistan's inflation outlook, as continued volatility in essential consumer prices reflects persistent cost-of-living pressure on low- and middle-income households across the country.

According to the weekly SPI report released by the Pakistan Bureau of Statistics (PBS) for the week ended January 22, 2026, prices of key food and household commodities showed mixed movements, underscoring the fragile balance between easing headline inflation and entrenched structural price pressures. The index, which tracks weekly price movements of 51 essential items across 50 markets in 17 urban centres, continues to demonstrate that inflationary stress is increasingly concentrated in basic consumption categories rather than discretionary goods.

The Sensitive Price Index (SPI) for the week ending January 22, 2026, recorded a decline of 0.48%. The decrease was largely driven by sharp reductions in the prices of essential items, including chicken (16.68%), potatoes (8.52%), onions (7.27%), LPG (3.54%), salt powder (1.52%), gur (1.00%), vegetable ghee 2.5 kg (0.87%), cooking oil 5 litres (0.53%), pulse masoor (0.27%), and cigarettes (0.11%). Conversely, notable price increases were observed in tomatoes (9.83%), bananas (3.66%), wheat flour (2.27%), eggs (1.02%), firewood (0.56%), pulse mash (0.53%), pulse moong (0.43%), shirting (0.27%), pulse gram (0.16%), and sugar (0.14%). During this period, out of 51 tracked items, 12 items (23.53%) recorded price increases, 11 items (21.57%) saw price decreases, and 28 items (54.90%) remained stable.

On a year-on-year basis, the SPI shows an overall increase of 4.18%. Significant annual price rises were recorded in wheat flour (38.60%), eggs (35.99%), gas charges for Q1 (29.85%), beef (12.75%), chilies powder (12.56%), firewood (10.83%), tomatoes (10.02%), bananas (9.94%), powdered milk (9.79%), gur (9.42%), lawn printed (8.29%), and shirting (8.22%). Conversely, prices fell for several key items, including potatoes (47.26%), garlic (36.28%), onions (35.55%), pulse gram (29.79%), Lipton tea (17.79%), chicken (16.79%), pulse mash (12.57%), pulse masoor (9.75%), diesel (1.27%), and petrol (0.95%).

Food items remained the primary drivers of weekly price changes. Vegetables, pulses, edible oils, and staple food items recorded notable fluctuations, reflecting supply-side disruptions, transport costs, seasonal factors, and inventory management practices in wholesale markets. Urban centres, in particular, experienced renewed pressure on vegetable prices due to weather-related supply constraints and logistical bottlenecks, while pulses and cooking oil prices remained elevated amid import dependence and the transmission of global commodity prices.

The SPI data further indicated that low-income groups are being disproportionately affected, with essential food items absorbing a larger share of household income compared to higher-income segments. This distributional impact reinforces concerns that inflation in Pakistan is becoming increasingly regressive, placing a heavier burden on vulnerable households despite broader macroeconomic stabilisation efforts.

Non-food essentials also contributed to inflationary pressures. Energy-linked items, including electricity charges and fuel-related inputs embedded in transport and distribution costs, continued to exert upward pressure on prices.