Islamabad: Pakistan’s Finance Ministry has projected that inflation is likely to remain elevated during the early months of the current fiscal year, although the country’s overall economic recovery and macroeconomic stability are expected to continue. The assessment was shared in the ministry’s latest Monthly Economic Update and Outlook Report.
According to the report, Pakistan recorded an average inflation rate of 7.1% during the previous fiscal year, compared with 4.5% in FY2024-25. Inflationary pressures intensified toward the end of the year, with the annual inflation rate rising to 11.1% in June, reflecting higher prices across several sectors of the economy.
For July, the Finance Ministry expects inflation to remain in the range of 9% to 10%. Despite the anticipated rise in consumer prices, the report says Pakistan’s external sector is expected to remain stable, supported by improved economic fundamentals and continued policy measures.
However, the ministry cautioned that renewed geopolitical tensions in the Middle East could create downside risks for both inflation and the external sector. Higher global energy prices and supply chain disruptions resulting from regional instability could place additional pressure on Pakistan’s economy.
The report also noted that the country’s economic recovery is gradually gaining momentum. Improved macroeconomic indicators, stronger fiscal management, and continued reforms are expected to help preserve overall economic stability despite external challenges.
According to the report, workers’ remittances reached $41.6 billion during the previous fiscal year, providing significant support to Pakistan’s foreign exchange reserves. The government also recorded higher revenue collection, reflecting improved tax performance and stronger economic activity.
Meanwhile, exports stood at $30.8 billion during the last fiscal year. The Finance Ministry believes that sustained export growth, stable remittance inflows, and prudent economic management will remain essential to maintaining economic resilience while addressing inflationary pressures in the months ahead.
