The study investigates the consumption pattern of Pakistani households and also the impact of remittances on the consumption pattern. To observe the consumption pattern, we have used four consumption categories such as food, non-food, durables and utilities. Using the Pakistan Panel Household Survey PPHS (2010), we have estimated the budget shares of households for food, non-food, durables and utilities. The results show that most of the expenditures were allocated to non-productive activities. Furthermore the study finds that if there is an increase in total income of a household, its budget share for food decreases. And it also proves the Engels‟s law in case of Pakistan which states that as the income increases, the budget share of food items decreases. In other words if there is an increase in total expenditures, the spending on food decreases. And same is the case when a household receives remittances from abroad, its income increases and budget share of food decreases rather they prefer to spend more on durables or non-food items. Supervisor:- Dr. G.M. Arif