Inflation is the rate at which prices rise across the economy, which lowers what your money can buy over time. It's measured by the Consumer Price Index (CPI).

A little inflation is normal and even healthy; high inflation quietly erodes your savings. In May 2026, Pakistan's inflation was 11.7%. Money sitting in cash loses real value as prices climb past it — which is the core reason to invest rather than only save.

In Pakistan: inflation is tracked monthly by the Pakistan Bureau of Statistics, and the State Bank targets a 5-7% range.

Example (PKR): at 11.7% inflation, something that cost Rs 100 a year ago costs about Rs 111.70 today.

Don't confuse it with: currency devaluation — the rupee falling against the dollar. The two are related but not the same thing.

Related terms: CPI · Compounding · Digital gold
Where you'll meet this: What is inflation · How inflation shrinks your savings