Pakistan’s finance ministry projects September inflation at 3.5–4.5% despite floods

Pakistan’s finance ministry on Tuesday projected consumer inflation for September to remain in a 3.5-4.5% range, citing flood-related disruptions caused by recent floods.

“Despite the disruption caused by recent floods, economic activity has remained broadly stable,” the Ministry of Finance said in its monthly outlook.

“The rebound in large-scale manufacturing, supported by encouraging trends in cement dispatches, automobile production, and allied industries, indicates strengthening industrial momentum in the months ahead,” it noted.

Pakistan experienced severe flooding as part of an extended monsoon season that began in late June 2025 and intensified through September. The disaster has primarily affected densely populated regions, especially in Punjab.

Meanwhile, the Ministry of Finance, in its monthly outlook, said that the external sector is expected to remain stable, with the current account deficit projected to stay manageable despite higher import demand.

“Remittances continue to provide strong support, exports are showing early signs of recovery, and declining global commodity prices may help ease the import bill,” it said.

Nevertheless, flood-related disruptions may exert pressure on food supply chains, leading to an uptick in prices. “As a result, inflation is expected to rise temporarily but remain contained within the 3.5–4.5% range in September 2025,” it noted.

Pakistan’s headline inflation clocked in at 3% on a year-on-year (YoY) basis in August 2025, a reading lower than that of July 2025, when it had stood at 4.1%, showed Pakistan Bureau of Statistics (PBS) data.

Meanwhile, the State Bank of Pakistan (SBP) in its latest Monetary Policy Committee (MPC) decided to keep the policy rate unchanged at 11%, citing the adverse impact of recent floods on the near-term macroeconomic outlook.