Pakistan inflation stays above target in October despite rate hike

What the numbers say

Year-over-year, prices were up 9.6% in October, slightly above the 9.5% consensus and below September's 10.26%. Even after that deceleration, inflation remains above the State Bank of Pakistan's target range of 5% to 7%.

Under the hood, food inflation eased to 7.74% from 8.2% in September. Housing and energy also cooled, rising 11.03% year over year after 12.39% the month before.

Why energy matters

The conflict in the Middle East is keeping global energy prices firm, and Pakistan's dependence on imported fuel makes it especially sensitive. Higher oil costs can feed directly into local prices and expand the import bill, which keeps overall inflation under pressure.

Policymakers responded by raising the benchmark rate to 12% last week and cautioned that persistent increases in food and energy could boost inflation expectations and later seep into core inflation.

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Near-term outlook and what it means for your portfolio

Ankur Shukla of Bloomberg Economics expects inflation to hover near 10% through March, then slip back into the target range during the quarter ending in June. He expects elevated energy prices, along with their ripple effects on other goods and services, to sustain near-term pressures.

Shukla also expects the central bank to hold from here, arguing policy is restrictive enough to tame price gains.

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