Staff Reporter
ISLAMABAD: The International Monetary Fund (IMF) has projected Pakistan’s average inflation rate at 8.4 percent for the fiscal year 2026-27, slightly above the federal government’s target of 8.2 percent and higher than the level recorded in the previous fiscal year.
According to the IMF’s latest country report and economic outlook, inflation is expected to remain in the single-digit range over the next five years, reflecting improving macroeconomic stability and the impact of ongoing economic reforms.
The Fund forecasts inflation to decline to 6.6 percent in FY2027-28 before stabilising at around 6.5 percent annually during FY2028-29, FY2029-30, and FY2030-31, indicating a sustained period of relative price stability.
Pakistan’s average inflation stood at 7.0 percent in FY2025-26, lower than previously anticipated, following a sharp decline from 23.4 percent in FY2023-24 and 29.2 percent in FY2022-23, when the country experienced severe inflationary pressures driven by currency depreciation, rising energy costs, and external financing challenges. Inflation had already eased significantly to 4.5 percent in FY2024-25 as economic conditions improved.
The IMF noted that inflation may rise modestly during the current fiscal year due to adjustments in energy prices, taxation measures, and a gradual recovery in domestic demand. However, the broader medium-term outlook points toward continued moderation in price pressures.
The report comes as Pakistan continues implementing reforms under its IMF-supported programme aimed at strengthening public finances, rebuilding foreign exchange reserves, improving tax collection, and addressing structural weaknesses in the economy.
In addition, the IMF has projected Pakistan’s economic growth at approximately 3.5 percent for FY2026-27, while stressing the need for prudent fiscal and monetary policies to maintain economic stability and keep inflation expectations under control.
Economic analysts believe the IMF’s outlook suggests that, if reform efforts continue and external shocks remain limited, Pakistan could be entering a period of lower and more predictable inflation after years of economic uncertainty and volatility.
