Karachi:
Pakistan supports a significant increase in food inflation in the coming months, as devastating floods have caused destruction of the country’s agricultural sector, especially in Punjab and Khyber-Pakhtunkhwa (KP).
The original estimates and a bleak comparison with the flooding crisis in 2022 are painted a worrying image for consumers who are already struggling with financial challenges.
The rising water levels that have submerged large shards of fruitful land and displaced thousands are expected to lead to serious deficiency and price increases for important foods.
“Food prices are likely to gather in the coming months due to loss and disruption due to the floods,” noted Mustafa Mustansir, head of research at Taurus Securities, in a report.
This assessment is based on initial estimates and draws parallels with the price developments observed after the floods in 2022, suggesting that food inflation could accelerate from September onwards.
He emphasized that prices for certain fruits and vegetables have already seen a sharp increase, indicating the immediate effect of the crisis.
National Disaster Management Authority (NDMA) has reported a staggering 819 deaths and over 8,658 damaged or destroyed houses. The cattle sector has also suffered huge losses, with 6,138 meters perished.
KP has been the hardest affected, sustained extensive infrastructure damage, including roads, bridges, power centers and irrigation channels.
Meanwhile, Punjab continues to face widespread destruction as flooding water, primarily released from the Indian side, relentlessly flows over its flooding places and forces thousands to evacuate.
The active monsoon conditions are expected to continue until at least 10 September 2025, with further heavy rainfall expected in eastern Punjab, KP, Azad Kashmir, Gilgit-Baltist and Sindh, aggravates flooding risks in downstream districts.
The threatening food crisis is not only a projection but a sharp reality for millions.
The report warned that items 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 extent of crop loss.
These staples form the Grundfjord in Pakistani households, and their increased prices will disproportionately affect families with low income and push many further into poverty.
In a remote effect of the floods in 2022, the report noted that “month of month (MOM) Growth in prices of non-perishable foods was an average of about 2.5% between July 2022 and December 2022. VAT growth in prices of perishable foods was on average about 4.8% during the same period.
While food inflation had been in decline from August 2024 to June 2025, on average about 0.4% mother, it recorded a sharp increase of about 3% in July 2025. This sudden leap signalizes the beginning of what could be a sustained period of rising food costs.
The agricultural sector, the backbone of Pakistan’s economy, has carried the floods.
The report emphasized that the growth target for the agricultural sector for FY26 is “most likely to be missed, which also affects overall GDP growth.”
In particular, cotton production is seriously affected with household arrivals that are already sharp down with 6% years to year for Punjab and 24% year by year for Sindh. This is likely to drive increased cotton import in FY26, which further exerts the country’s import bill.
In addition to immediate food shortages, the ripple effects of the floods are expected to casing across different sectors. The fertilizer industry expects a “sharp decrease in demand” as agricultural activities are sanded to stop in the affected areas.
The car sector, especially passenger cars and 3 wheels, will probably see a decrease in rural sales due to weakened agricultural economy.
Building materials are also expected to experience a slowdown in dispatches due to disturbed construction activities, although the reconstruction after flooding could eventually rebuild the demand.
The report also expected a potential decrease in oil products sales as commuting and economic activity are disturbed in the affected areas.
The financial sector is also not immune. While no large decrease in deposits is expected, commercial banks may face “some loss of revenue due to branch levels.”
More regarding is the expected “increase in Agribusiness NPLS” (non-executing loans) as a consequence of flood-induced damage to the clients with the infection ratio in the agricultural sector already to approx. 5% per March 2025.
The most critical long -term concern is perhaps the impact on Pakistan’s balance of payments. The floods are likely to “result in increasing Pakistan’s import bill, especially running higher food imports due to domestic deficiency.”
Conversely, the export proceeds may suffer due to the loss in the production of important agricultural exports such as rice and other fruits. This double effect of increased imports and reduced exports will further strain the country’s already uncertain external account.
The report’s basic case for the National Consumer Price Index (NCPI) for FY26 is now 7.8% year by year and includes the effect of softer fuel prices in the future.
However, any “significant crop damage due to the floods, especially in parts of Sindh and Punjab, is a key on the main risk of our projections.”
An upward revision of the NCPI expectations also means that “we do not expect any reduction in interest rates for the rest of the current financial year” potentially hinder financial recovery.
