ISLAMABAD (Web Desk) - Pakistan’s annual inflation rate accelerated in May, official data showed on Monday, while stocks fell nearly 2 percent as investors grappled with rising global oil prices, renewed inflation concerns and uncertainty ahead of this week’s federal budget.
According to the Pakistan Bureau of Statistics, Pakistan’s headline inflation reached 11.7 percent year-on-year in May 2026, accelerating from 10.9 percent in April. This marks the highest reading in nearly two years, driven largely by rising global energy import costs following the Middle East conflict. On a month-on-month basis, prices increased by 0.5 percent.
“Elevated oil prices revived concerns over inflation and external account pressures, dampening investor confidence and triggering broad-based selling across key sectors,” brokerage house Topline Securities said in a market review.
The benchmark KSE-100 index closed at 170,600 points, down 3,362 points, or 1.93 percent, after touching an intraday low of 3,565 points during the session.
Topline said the market remained under sustained selling pressure throughout the day as international oil prices rose amid escalating conflict between Israel and Lebanon, reviving concerns about inflation and Pakistan’s balance of payments outlook.
“The negative momentum was primarily driven by a surge in international oil prices amid rising geopolitical tensions in the Middle East,” the brokerage said.
The bearish sentiment was led by heavyweight stocks including Engro Holdings, Fauji Fertilizer Company, Lucky Cement, Hub Power Company and Oil & Gas Development Company, which collectively erased 1,464 points from the benchmark index, according to the report.
Market activity remained relatively robust despite the selloff, with total traded volume reaching 590 million shares and turnover standing at 31.98 billion rupees ($114.8 million). DCL was the most actively traded stock, with 43 million shares changing hands.
Pakistan has made significant progress in reducing inflation since the economic crisis that pushed consumer price growth above 30 percent in 2023, when soaring food and fuel prices, a weakening currency and dwindling foreign exchange reserves squeezed households and businesses.