Most of the studies in Pakistan investigated the impact of inflation on the total market returns. We examined the impact of various types of inflation on the Pakistan Stock Market (PSX) sectors, which are classified according to the ‘Global Industrial Classification Standard (GICS). To profoundly analyze the inflation news, we consider the ‘Flow-Through’ and ‘Market Direction’ hypothesis. Our results were somehow consistent with the two hypotheses. The FTC estimates were different for each sector indicating dissimilar growth and profits among industries. The unexpected inflation affects the sectoral returns depending on the sign of the surprise, economic activity, and flow-through of the sector. An investor needs inflation risk protection so this study would give considerable implications on the behavior of the investor. Supervisor:- Dr. Ahsan-ul-Haq Satti