This study examines the price dynamics across 17 cities within Pakistan. Considering monthly disaggregated goods prices, the convergence behavior among tradable, non-tradable and energy goods is examined. Using panel econometric methods the results show overwhelming evidence of mean reversion of relative prices among cities. Varying across items, the speed of convergence is only a few months or less. However the results do challenge some of the previous findings as the services which are considered as non-tradable items also reject the null of unit root with half-lives of less than a year. These results support the conjecture that intranational prices converge at a faster rate as compared to international prices. Greater tendency of convergence towards Law of One Price implies high integration of Pakistani markets or perhaps low degree of specialization and market differentiation. Supervisor:- Dr. Hasan Muhammad Mohsin