Cotton, rice, wheat among worst-hit; imports likely to rise sharply
KARACHI:
Pakistan is bracing for a fresh wave of food inflation after devastating floods swept through Punjab and Khyber-Pakhtunkhwa, destroying vast stretches of farmland and raising fears of acute shortages of essential food items.
Agricultural experts warn that the fallout could mirror or even surpass the 2022 flood crisis, which had sent food prices soaring and left millions struggling to afford basic staples. With thousands displaced and fertile land submerged, the economic impact is already rippling through markets.
“Food prices are expected to climb in the coming months as crop losses and supply chain disruptions deepen,” said Mustafa Mustansir, head of research at Taurus Securities. He noted that the sharp uptick in fruit and vegetable prices being witnessed now is only an early glimpse of what lies ahead.
Human and economic toll
The National Disaster Management Authority (NDMA) has reported at least 819 deaths, along with damage to more than 8,600 homes. The livestock sector has also been severely hit, with over 6,000 animals lost. Infrastructure has taken a heavy beating in Khyber-Pakhtunkhwa, where roads, bridges, power stations and irrigation networks have been washed away.
Punjab, meanwhile, remains under siege from floodwaters, much of it flowing in from the Indian side. Entire villages have been forced to evacuate as floodplains fill rapidly, while forecasts suggest that monsoon rains will continue until at least September 10, worsening the situation in downstream areas of Punjab, Sindh, Azad Kashmir, and Gilgit-Baltistan.
Food inflation looms large
Wheat, rice, onions, potatoes, milk, eggs, and pulses are among the commodities flagged as most vulnerable. Analysts fear that low-income households already struggling with high living costs will be hit the hardest.
Drawing comparisons with the 2022 floods, Taurus Securities highlighted that prices of perishable food items had spiked nearly 5% month-on-month during the second half of that year, while non-perishables rose by around 2.5%. Although food inflation had been easing until mid-2025, July saw a sudden 3% surge, raising alarms of a prolonged price spiral.
Agriculture and industry under strain
The agricultural sector the backbone of Pakistan’s economy is expected to miss its growth target for FY26, which will drag down overall GDP growth. Cotton has been particularly hard hit, with arrivals down 6% year-on-year in Punjab and 24% in Sindh. This decline is likely to force higher cotton imports, putting more pressure on the country’s import bill.
The ripple effects are expected to spread across industries: fertiliser demand is projected to slump, rural automobile sales may shrink, and construction material dispatches are likely to fall until post-flood rebuilding begins. Even the petroleum sector could see reduced sales as transport and farm activity slows.
The banking industry is also bracing for a surge in non-performing loans within the agribusiness sector, which already had a 5% infection ratio earlier this year.
Balance of payments under pressure
Perhaps the gravest long-term challenge is the strain on Pakistan’s external account. Rising food imports, combined with a likely fall in agricultural exports such as rice and fruits, could worsen the balance of payments crisis.
Analysts project the National Consumer Price Index (NCPI) to average 7.8% for FY26, factoring in somewhat softer fuel prices. However, they caution that further crop losses in Punjab and Sindh could push inflation higher and delay any prospect of interest rate cuts, complicating hopes of economic recovery.
