The explosion occurred at around noon in a mobile phone market at Hashtnagri in Peshawar, the capital of the restive Khyber-Pakhtunkhwa province.
Police and rescue service officials said one person was killed. Officials at a nearby hospital said they had received 10 injured people.
No group claimed responsibility for the bombing though such attacks are usually blamed on the banned Pakistani Taliban.
Hundreds of people have died in terrorist attacks across Khyber-Pakhtunkhwa in the past five years and the Chief Minister of the province recently survived an assassination bid by a Taliban suicide bomber.
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