In April 2026, energy prices rose sharply due to the blockage of the Strait of Hormuz. The last time inflation exceeded 10 percent was in July 2024, when the Consumer Price Index (CPI) reached 11.1 percent.

Key statistics:

• Urban inflation stood at 11.11 percent compared to 10.56 percent in rural areas.
• Food inflation increased by 6.9 percent in urban areas and 7.3 percent in rural areas.
• Core inflation was recorded at 8 percent in urban areas and 8.5 percent in rural areas.

The State Bank of Pakistan responded by increasing its policy rate from 10.50 percent to 11.50 percent. This decision aligns with commitments made to the International Monetary Fund.

Prime Minister Shehbaz Sharif noted that the weekly oil import bill has jumped significantly, from $300 million to $800 million since the onset of the US-Israel war on February 28.

Dr. Ashfaq H. Khan stated that interest rates are a demand-side tool, effective when demand exceeds supply.

The Euro area annual inflation is expected to be 3.0 percent in April, an increase from 2.6 percent in March.

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Pakistan received $3.3 billion in remittances in February 2026, reflecting a steady inflow despite rising tensions in the Middle East. This figure marks a 5.1% decline from January’s remittance total of $3.46 billion, as reported by the State Bank of Pakistan (SBP).

For the July-February period, total remittances increased by 10.5%, reaching $26.5 billion compared to the same period last year. The SBP’s latest data indicates that the remittance inflows have remained robust, a crucial lifeline for many families in Pakistan.

The ongoing conflict in the Middle East has raised concerns about the stability of these inflows. Oil supplies from oil-producing Arab nations have ceased or remained significantly below normal levels for the past 12 days, which could impact future remittance flows and domestic fuel prices.

In response to current economic conditions, the SBP has decided to keep the policy rate unchanged at 10.5%. This decision comes as headline inflation rose to 7% in February 2026, adding pressure on consumers and businesses alike.

Moreover, large-scale manufacturing recorded a cumulative growth of 4.8% during the first half of the fiscal year 2026, indicating some resilience in the industrial sector. The current account posted a surplus of $121 million in January 2026, while foreign exchange reserves increased to $16.3 billion.

Despite these positive indicators, the government recently raised petroleum prices by Rs55 per litre, a move that could further strain household budgets. The Pakistani rupee recorded a marginal gain of 0.92 paisa against the US dollar, closing at PKR 279.36 per USD.

As observers watch the situation closely, uncertainties remain regarding the stability of remittance inflows as the regional situation develops. Potential challenges to remittance flows in March due to ongoing conflict could further complicate the economic landscape. Details remain unconfirmed.

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