Pakistan's Inflation Jumps to 11.7% as Jet Fuel and Diesel Import Costs Balloon

Pakistan's Inflation Jumps to 11.7% as Jet Fuel and Diesel Import Costs Balloon An energy-led price shock from the Iran war and the Hormuz closure is hitting import-dependent economies, with Pakistan's May reading the clearest signal yet. Pakistan's headline inflation accelerated to 11.7% in May, its fastest in two years, after jet fuel prices jumped 94% and diesel 70% from a year earlier, the Pakistan Bureau of Statistics reported on Monday (2026-06-01). The reading was up from 10.9% in April.⁷ That matters because the increase is being driven almost entirely by imported energy, not domestic demand. Core inflation, which strips out food and fuel, rose 9% year on year and 8% month on month in urban areas, the bureau said, leaving the gap between the headline and core figures as a fairly direct measure of the energy shock. Motor gasoline rose 62%. The biggest annual increases were registered in sorghum, wheat, jet fuel, diesel and gasoline.⁷ The shock traces back to the Middle East. Crude and refined product prices climbed sharply through the first quarter of 2026, particularly after military action in the region on February 28 (2026-02-28) and the subsequent de facto closure of the Strait of Hormuz, the US Energy Information Administration said.¹ For an importer like Pakistan, the product side of that move bites harder than the crude. Refined fuels have tightened faster than barrels. Across Asia, big domestic refiners were ordered to suspend exports of diesel and petrol, and many plants were cutting runs by 10% or more, the data firm Kpler reckoned, draining the regional pool that import-dependent buyers draw on.⁴ Supply has thinned from another direction too. Russia's average refinery runs fell to 4.69 million barrels a day in April (2026-04), the lowest in more than 16 years, OilX estimated, as Ukrainian drone strikes knocked out processing capacity. Moscow was weighing limits on diesel and jet fuel exports, Interfax reported on 2026-05-27, a step that would pull more middle distillate out of an already short market.⁶ Asia sits at the center of the exposure. The Gulf supplies between 40% and 80% of the seaborne crude bought by China, India, Japan and South Korea, and in 2025 Asia absorbed roughly 87% of the crude and 86% of the LNG that passed through Hormuz, according to the Economist. Japan draws about 95% of its oil from the Middle East, around 70% of it routed through the strait.³ The subsidy bill is the usual pressure valve, and it is straining. In Thailand, diesel subsidies were costing the government more than 1bn baht (£22m) a day, and petrol stations had seen panic buying with some posting out-of-stock signs.⁵ Pakistan has far less fiscal room to absorb the same hit, which is why the cost is showing up directly in the consumer price index rather than buried in the budget. The pull on fuel is global. US exports of crude and petroleum products hit a record 14.2 million barrels a day in the week of 2026-05-11, 33% above the same week of 2025, the EIA reported, while total US stocks including the strategic reserve fell about 24.1 million barrels, one of the five largest weekly declines on record. Barrels leaving the US tighten the same product market Pakistan imports from.² What to watch now is duration. The Economist cited bank estimates that if Hormuz disruptions persist for five more weeks, euro-area inflation alone could rise by nearly a percentage point over the following year; for thinner-buffered importers the pass-through is faster and sharper.³ Pakistan's May print captured a market that was still tightening, not one that had peaked. If Russian export curbs land and Asian refiners stay defensive on runs, June's distillate prices set the next leg, and the country has little cushion left to keep it out of the inflation numbers.