Karachi:
Pakistan is preparing for a significant increase in food inflation in the coming months, since devastating floods have wreaked havoc in the country’s agricultural sector, particularly in Punjab and Khyber-Pakhtunkhwa (KP).
Initial estimates and a gloomy comparison with the 2022 flood crisis paint a worrying image for consumers who already deal with economic challenges.
Ascending water levels, which have submerged vast stripes of fertile and displaced land, thousands are expected to lead to severe shortage and price increases for essential foods.
“It is likely that food prices recover in the coming months due to losses and interruptions due to floods,” said Mustafa Mustansir, head of research of Taurus Securities, in a report.
This evaluation is based on initial estimates and draw parallels with the price trends observed after the floods of 2022, which suggests that food inflation could be accelerated from September.
He stressed that the prices of certain fruits and vegetables have already seen a strong increase, indicating the immediate impact of the crisis.
The National Disaster Management Authority (NDMA) has reported 819 deaths and more than 8,658 damaged or destroyed houses. The cattle sector has also suffered immense losses, with 6,138 heads of perished.
The KP has been the greatest extensive infrastructure damage, including roads, bridges, powers and irrigation channels.
Meanwhile, Punjab continues to face a generalized devastation as flood waters, mainly released from the Indian side, flows relentlessly through its flood plains, forcing thousands to evacuate.
The conditions of the active monsoon are expected to persist until at least September 10, 2025, with stronger anticipated rains in eastern Punjab, KP, Kashmir, Gilgit-Baltistan and Sindh, exacerbating the risks of flooding in later districts.
The imminent food crisis is not simply a projection but a marked reality for millions.
The report warned that articles such as wheat, rice, potatoes, onions, tomatoes, milk and eggs are the most vulnerable. The pressure can also be seen in the case of pulses and other foods, subject to the extension of crop losses.
These basic foods form the rock bed of Pakistani households, and their increase in prices will disproportionately affect low -income families, pushing many more to poverty.
Remembering the impact of the floods of 2022, the report indicated that “the growth of the month in month (mother) in the prices of non -perishable food averaged around 2.5% between July 2022 and December 2022. Mother’s growth in the prices of perishable food averaged around 4.8% during the same period.
Although food inflation had decreased from August 2024 to June 2025, with an average of around 0.4% of mom, it recorded a strong increase of approximately 3% in July 2025. This sudden jump indicates the beginning of what could be a sustained period of increasing food costs.
The agricultural sector, the backbone of Pakistan’s economy, has taken the worst part of the floods.
The report stressed that the growth objective for the agricultural sector for fiscal year 26 is “more likely to be lost, which affects the general growth of GDP as well.”
Cotton production, in particular, is seriously affected, with national cotton arrivals that already decrease abruptly by 6% year -on -year for Punjab and 24% interannual for Sindh. This is likely to drive the increase in cotton imports in fiscal year 26, further striving the country’s import invoice.
Beyond the immediate shortage of food, the effects of floods are expected to be marked in several sectors. The fertilizer industry anticipates a “strong fall in demand” as agricultural activities stop in the affected areas.
The automobile sector, especially passenger cars and 3 -wheeled vehicles, will probably see a decrease in sales of rural areas due to the weakened agricultural economy.
Construction materials are also expected to experience a slowdown in shipments due to interrupted construction activities, although the reconstruction after flood could eventually bounce demand.
The report also anticipated a possible drop in sales volumes for oil products, since economic and economic activity are interrupted in the affected areas.
The financial sector is not immune either. While an important drop in deposits is not anticipated, commercial banks could face “some loss of income due to interruptions at the branch level.”
More worrying is the “increased agribusiness NPL” (loans without yield) as a consequence of damage induced to clients, with the infection ratio of the agricultural sector already in approximately 5% to March 2025.
Perhaps the most critical long -term concern is the impact on the balance of Pakistan payments. It is likely that floods “result in the increase in the import invoice of Pakistan, particularly promoting higher food imports due to national scarcity.”
On the contrary, export income may suffer due to the loss in the production of key agricultural exports such as rice and other fruits. This double impact of import increase and export reduction will force further the external account of the country.
The base case of the report for the National Consumer Price Index (NCPI) for fiscal year 26 is now 7.8% year -on -year, which incorporates the impact of the softest fuel prices on the future.
However, any “significant damage to crop due to floods, especially in parts of Sindh and Punjab, is a potential risk for our projections.”
An upward review in NCPI’s expectations also implies that “we do not anticipate any reduction in interest rates for the rest of the current fiscal year,” potentially hindering economic recovery.
