Finance ministry projects July inflation at 3.5-4.5% as price pressures ease

KARACHI: Pakistan’s finance ministry on Monday projected consumer inflation for July to remain in a 3.5-4.5% range, citing stable prices and improved supply conditions, as price pressures ease further after the previous fiscal year’s sharp decline.

Inflation stood at 3.2% in June, the ministry said in its monthly economic report, while average inflation for the fiscal year ending June 30 dropped to 4.49%, a nine-year low, from 23.4% the year before. Pakistan’s fiscal year begins on July 1.

The ministry said the economy is expected to sustain its recovery in the early months of fiscal year 2026, underpinned by an improved macroeconomic backdrop and growing investor confidence.

Large-scale manufacturing likely maintained momentum in June, supported by rising private sector credit offtake and expanding production activity, the report said. The rebound is expected to lift imports of raw materials and intermediate goods, while aiding value-added exports, it added.

Inflation expected to lower slightly in Pakistan

Strengthening domestic demand, a stable exchange rate, and steady global commodity prices were also likely to boost exports, remittances and imports in July, reinforcing external sector stability, the ministry said.

However, it warned that recent heavy rains could pose risks to agricultural output and supply chains, potentially impacting the inflation outlook in the coming months.

Since June? 26, rain- and flood-related incidents have killed at least 266 people and injured more than 630 nationwide, according to the National Disaster Management Authority, adding that 1,557 houses had been destroyed.