Slug: inflation-rate-call-october-2026

Category: Business News

Focus keyphrase: Pakistan interest rate

SEO title: Pakistan Interest Rate: 10% Inflation Splits Analysts

Meta description: Headline inflation may hit 10% in October on rising fuel and power costs. Growth Securities expects a hike, AKD a hold. SBP decides October 26.

Tags: Pakistan interest rate, SBP, inflation Pakistan, monetary policy, State Bank of Pakistan, petrol prices, economy, MPC meeting

Original element: our own data point — Feature Pakistan’s own October 22 petrol-price coverage (Rs2.71 cut on petrol, diesel up 31 paisa) anchors the fuel-cost driver both brokerages cite; plus explainer context on what a hike or hold means for borrowers and businesses.

Pakistan Interest Rate Call Split as Inflation Heads for 10%

KARACHI: Pakistan’s headline inflation is expected to climb to 10% in October 2026, and analysts are split on whether the State Bank of Pakistan will answer with a Pakistan interest rate hike or hold steady at its October 26 monetary policy meeting.

Growth Securities expects the National Consumer Price Index to rise 1.5% month on month. Its analyst Nasheed Malik projects the central bank could raise the policy rate by 50 to 100 basis points if fuel prices stay high.

AKD Securities disagrees. Its director of research, Mohammed Awais Ashraf, argues that stronger remittances, improving exports and record foreign exchange reserves give the SBP room to hold rates where they are.

Growth Securities sees 10% inflation in October

The Growth Securities report puts October inflation at 10% year on year, up from 6.2% in October 2025. Average inflation for the first four months of FY27 is projected at 10.2%, against 4.8% a year earlier and above the government’s 8.9% FY27 target.

Fuel and power costs are doing most of the damage. The transport index is expected to rise 0.15% to 0.20% month on month after the average petrol price jumped 5.5% in a month to Rs396.06 per litre, up 48.3% from a year earlier. The housing index is also set to climb on higher electricity charges and LPG prices, projected up 6.2% month on month.

Food is adding pressure too. The food index is forecast to rise 0.25% to 0.30% in the month, driven by a 10% rise in wheat prices, 14% in chicken, 11% in pulse gram and 5% in garlic.

He expects inflation to stay in the 9% to 10% band until March 2027 if average fuel prices hold between Rs390 and Rs400 per litre, with full-year FY27 inflation at 9% to 9.5%.

AKD Securities makes the case for a hold

Ashraf’s assessment rests on firmer external buffers. Robust remittances, improving exports, record-high foreign exchange reserves and a contained current account position have strengthened Pakistan’s macroeconomic position, he wrote, giving the SBP space to keep the Pakistan interest rate unchanged.

A slowdown in large-scale manufacturing and a decline in fuel prices since the previous MPC meeting also point towards a status quo decision, in his view.

Ashraf still raised his FY27 inflation forecast to 9.1% from an earlier estimate, reflecting a higher oil price assumption of $96.3 per barrel against $72.5 previously. He kept the FY28 forecast at 6% and pushed expected easing to April 2027.

Dubai crude has fallen 15.5% since the last MPC meeting, from $127 to $107 per barrel. But Houthi attacks on Saudi infrastructure, Red Sea disruption and falling US oil inventories continue to support prices. Real interest rates should average 3.4% over the next 12 months, the report said.

What the Pakistan interest rate decision means for borrowers

A 50 to 100 basis point hike would raise borrowing costs across the economy, from business working capital to consumer and auto finance. A hold, on the other hand, would signal the central bank’s confidence that inflation will cool as fuel prices ease.

For ordinary households, the October numbers are already being felt at the pump and in the kitchen. Feature Pakistan reported on October 22 that the government cut the petrol price by Rs2.71 per litre while raising high-speed diesel by 31 paisa, a mixed revision that feeds directly into the transport index both brokerages are watching.

The IMF, for its part, projects 7.2% inflation for this fiscal year, up from its earlier 6.3% estimate. With the MPC meeting set for October 26, the next few days of fuel and currency data will decide which camp gets it right.

Read more: Petrol price cut by Rs2.71, diesel up 31 paisa for October 22 | Short-term inflation rises 11.97% year on year | SPI inflation climbs 11.38% in October

Will the SBP raise the policy rate on October 26?

Growth Securities expects a 50 to 100 basis point hike if fuel prices stay high. AKD Securities expects the Pakistan interest rate to stay unchanged.

What is driving October inflation to 10%?

Higher electricity charges, petrol prices and food costs. Wheat is up 10% in the month, chicken 14%, pulse gram 11% and garlic 5%.

What is Pakistan’s inflation outlook for FY27?

Growth Securities projects average inflation of 9% to 9.5% for FY27. AKD Securities raised its forecast to 9.1%, while the IMF projects 7.2%.