Inflation is expected to remain within the 5 to 6 percent range in January, according to the Finance Division’s monthly economic outlook report, indicating continued easing of price pressures and improving macroeconomic stability.
The report noted that Consumer Price Index (CPI) inflation eased to 5.6 percent on a year-on-year basis in December 2025, down from 6.1 percent in November, reflecting a steady deceleration in inflationary trends. However, the December reading was higher than the 4.1 percent recorded in the same month last year, largely due to base effects and lingering pressures in select food and energy items.
“Inflation is expected to remain within the range of 5.0–6.0 percent in January,” the Finance Division said, adding that stable supply conditions, disciplined fiscal management, and a cautious monetary stance have contributed to containing price volatility.
On the external front, the report acknowledged that the current account is projected to remain in deficit in the near term. However, it stressed that strong remittance inflows, along with steady growth in information technology and services exports, are expected to help offset external pressures and support foreign exchange stability.
The Finance Division attributed the economy’s “positive trajectory” to a combination of prudent fiscal policies, ongoing structural reforms, and easing monetary conditions as inflationary pressures subside. It said these factors have helped improve investor confidence and laid the groundwork for sustainable economic growth.
Looking ahead, economic activity is projected to strengthen gradually in the coming fiscal year. International credit rating agency S&P Global has forecast Pakistan’s real GDP growth at 3.5 percent for fiscal year 2026, with growth expected to accelerate to 4.4 percent in FY27. Meanwhile, the State Bank of Pakistan (SBP) has projected GDP growth in the range of 3.75 to 4.75 percent for FY26.
Both S&P and SBP projections align with the government’s assessment that macroeconomic conditions are stabilizing, supported by improved fiscal discipline, a narrowing inflation outlook, and gradual recovery in key sectors. The report emphasized that Pakistan is focused on attracting foreign investment and transitioning toward an export-led growth model to ensure long-term economic resilience.
