Abstract
Turmoil in Pakistan economy, bulging inflationary trend and increasing foreign dependence due to specifically energy import have reignited interest in the link between energy crisis and economic performance. This paper examines the impact of energy crisis on inflation using annual data from 1971 to 2011. ARDL bounds testing approach has been adopted for empirical analysis. This approach assures the existence of long run relationship and determines the direct impact of aggregate energy crisis on inflation rate. These outcomes call for the immediate actions to restructure energy sector along with fiscal and monetary measures as energy crisis is leading to stagflation.