Finance ministry sees June inflation at 11-12%

Pakistan’s Finance ministry projected on Tuesday the benchmark CPI inflation reading in the range of 11-12% in June 2026 amid declining oil prices in the wake of easing geopolitical tensions.

The headline inflation clocked in at 11.7% on a year-on-year (YoY) basis in May 2026, which was the highest reading since June 2024, according to Arif Habib Limited (AHL).

In its Monthly Economic Update and Outlook June 2026, the ministry anticipated the reading would recede in the coming months, which would support economic growth prospects for the fiscal year 2026-27.

The government has set the economic growth target at 4% for FY27. The country hit three-year high GDP growth at 3.7% in the FY26.

With macroeconomic stabilisation largely achieved in the fiscal year 2025-26, Pakistan’s economy is expected to maintain its growth momentum in FY27, “supported by improving macroeconomic fundamentals, sustained expansion in manufacturing, especially LSM [large scale manufacturing], a stable external account, improved fiscal discipline and continued resilience in the agriculture sector”.

The recent easing of geopolitical tensions, due to the ongoing peace efforts in the Middle East, has improved global market sentiment.

“Consequently, international crude oil prices have eased from their recent highs, which is expected to reduce imported inflationary pressures and help lower domestic fuel and transportation costs.”

Lower international oil prices are also expected to support the external account by containing the oil import bill.

“On the domestic front, prudent macroeconomic policies, continued fiscal consolidation, and targeted support for productive sectors are expected to sustain economic growth while preserving macroeconomic stability.

“The external sector outlook has strengthened further, supported by record workers’ remittances [at $4.25 billion] in May 2026 and continued growth in IT exports which are expected to reinforce the balance of payments, support foreign exchange reserves, and enhance resilience against external shocks.”

Overall, with geopolitical risks receding, global energy prices moderating, inflationary pressures easing and external buffers improving, Pakistan’s economic outlook remains favourable, with growth expected to strengthen while maintaining macroeconomic stability, according to the report.