The Ministry of Finance on Tuesday said inflation is expected to rise temporarily in September 2025 due to flood-related supply disruptions. However, the increase is projected to remain contained within the 3.5–4.5 percent range.
According to the ministry’s latest Economic Update & Outlook, food supply chains are facing pressure after the recent floods. This could lead to a short-term price surge. Despite these challenges, economic activity has stayed broadly stable, supported by manufacturing and external sector resilience.
Large-scale manufacturing has shown a positive rebound, with encouraging trends in cement dispatches, automobile production, and allied industries. These developments signal strengthening industrial momentum in the coming months. The external sector is also expected to stay manageable. Exports are recovering, remittances remain strong, and easing global commodity prices may lower import costs.
The report noted that Pakistan’s economy has managed to stay on its path of stability and growth in the first two months of FY2026. Inflation eased in August to 3.0 percent year-on-year, compared to 4.1 percent in July. On a monthly basis, consumer prices actually fell by 0.6 percent in August.
The ministry highlighted that while inflation may rise temporarily, overall macroeconomic conditions remain stable. Strong revenue growth, fiscal discipline, and external inflows are providing the economy with a cushion against shocks. Fiscal performance in early FY2026 has been on track, supported by higher revenues and controlled expenditure.
The current account deficit widened to $624 million in Jul-Aug FY2026, up from $430 million a year earlier. Exports rose 10.2 percent, while imports increased 8.8 percent. Remittances, however, showed a healthy growth of 7.0 percent, reaching $6.4 billion.
Investor confidence remains steady, reflected in stock market gains and stable monetary conditions. The report concluded that despite temporary pressures, inflation will likely remain within target, and the economy is positioned to continue its growth path.
ADB emphasized that inflation may rise temporarily but is not expected to derail broader stabilization efforts.
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