Pakistan's general inflation jumped to 11.7% in May from a year earlier, accelerating from 10.9% annual inflation in April, according to data from the Pakistan Bureau of Statistics published on Monday. The surge reflects a sharp increase in international oil and gas prices amid the ongoing Iran war, which has driven up energy import costs for the South Asian nation.
Core inflation, which strips out volatile food and energy components, rose by 9% year over year in urban areas for May. Month over month, urban core inflation increased 8%, signaling that price pressures are broadening beyond just fuel and food categories, the statistics data showed.
The supply shock originates in the Strait of Hormuz, where disruption to shipping has impacted nearly 27% of the global maritime oil trade. This has triggered historic shortages and placed long-term operational strain on Gulf energy infrastructure, with estimates that repairing damaged LNG facilities in Qatar could take up to five years.
Higher energy import costs have hit Pakistan at a vulnerable moment, as the country relies heavily on imported oil and gas for its power generation and industrial base. The combination of steeper fuel bills and broader inflationary momentum raises pressure on the central bank to tighten monetary policy further.
The Iran war's impact on global commodities extends well beyond crude oil, affecting petrochemicals, agriculture and shipping sectors. Even as de-escalation efforts continue, the duration of repair work on key Gulf energy assets suggests supply constraints may persist for years.
Counter-argument: Some analysts argue that Pakistan's inflation spike is not solely attributable to energy import shocks, but also reflects domestic structural factors, including currency depreciation and fiscal imbalances, that have amplified the pass-through of global price rises.