Flooding in major parts of the country have inflicted damages worth $1.4 billion to Pakistan, initial estimates in a report by Arif Habib Ltd have shown.
According to the reports, the agricultural sector was the worst-affected with $1 billion in damages due to the destruction of key crops such as sugarcane, rice and cotton as over 1.3 million acres of farmland remain submerged in Punjab. Catastrophic losses in Sindh have added to the threats facing food security and rural livelihoods.
The transport and communication sector has been hit hard with damages valued at $333 million whereas losses worth over $31 million have been reported as a result of the destruction of roads, bridges and communication networks.
Livestock losses, while relatively minor in aggregate at $2 million, have dealt a severe blow to rural households where animals often serve as critical assets.
While total losses are equivalent to 0.33% of the country’s GDP, the floods are also expected to widen Pakistan’s trade deficit by $1.9 billion for the ongoing year.
With shortages in essential commodities such as rice, sugar, and vegetables, food inflation is expected to spike, potentially raising the Consumer Price Index (CPI) to 7.2% in FY26, up from the pre-flood estimate of 5.5%. Early signs of this strain are already evident, with sharp price increases reported for wheat, tomatoes and onions.
Separately, soaring retail prices of perishable food items spiked short-term inflation to 5.07 percent year-on-year in the week ending Sept 4.
Measured by the Sensitive Price Index (SPI), short-term inflation refers to recent and frequent changes in the price of goods and services within an economy, rather than a long-term trend. It is measured to quickly gauge shifts in consumer prices and purchasing power over a very short period.
SPI inflation has been on an upward trajectory for the past seven weeks, fueled mainly by sharp increases in the prices of tomatoes, onions, potatoes, rice, chicken, liquefied petroleum gas (LPG) and wheat flour. Official data showed that inflation increased by 1.29pc on a weekly basis.
Tomatoes led the surge, retailing at up to Rs300 per kg in Islamabad, while sugar climbed to Rs195–200 per kg. Meat prices also maintained a steady upward trend in recent weeks.