Abstract: Inflation refers to the sustained increase in the aggregate or general price level in any economy; that fluctuates because of the different economic factors. In this study two independent variables (interest rate & GDP growth rate) and one dependent variable (inflation) is designed to examine their impact. The hypotheses regarding the impact were made to determine the significance between variables. This research work proved that there is significant impact of interest rate & GDP growth rate on inflation that’s why both hypotheses cannot be rejected. Spss18 has been used for the interpretation of results by applying the technique of Linear Regression. Inclusively statistical results recommended that interest rate & GDP growth rate is significantly related with the inflation rate.