Finance ministry projects inflation reading at 5-6% in October 2025

KARACHI: Pakistan’s Finance ministry said on Monday the uptick in inflation reading was a temporary phenomenon in the wake of floods, projecting the reading in the range of 5% to 6% for the outgoing month of October 2025.

In its Monthly Economic Update & Outlook October 2025, the ministry said consumer price index (CPI) inflation reading was expected to remain contained within target in the current fiscal year 2025-26.

“Flood-related supply disruptions and temporary border closures have put upward pressure on prices of a few essential commodities. Inflation is expected to remain in the range of 5-6% in October 2025,” the outlook report read.

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The CPI inflation recorded at 5.6% year-on-year (YoY) in September 2025 as compared to 3% in the previous month of August 2025 and 6.9% in September 2024.

“Inflation, though temporarily affected by food-supply pressures, is expected to remain contained within target [5-7% in FY26].”

“The successful IMF review under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF) reaffirms confidence in Pakistan’s reform trajectory and prudent macroeconomic management,” it reads.

It maintained that Pakistan’s economy had maintained its recovery path despite flood-related disruptions.

“Industrial activity remains resilient, supported by a rebound in large scale manufacturing particularly in cement, automobiles, and allied sectors while exports and remittances are showing steady improvement.

“The external sector remains stable, with a current account surplus recorded in September 2025, amid robust remittance inflows. Inflation, though temporarily affected by food-supply pressures, is expected to remain contained within target,” it added.

Upgrades by global rating agencies Fitch, S&P, and Moody’s are reflection of renewed investor confidence, according to the ministry.

“Continued progress in privatisation, digital governance, and CPEC (China-Pakistan Economic Survey) phase-II joint ventures underscores the government’s commitment to fiscal consolidation, structural transformation, and sustainable, inclusive growth.”

These developments are reflected in sharp decline in Pakistan’s sovereign default risk with its Credit Default Swap probability declined by 2,200 basis points over the past 15 months.

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“Moreover, Pakistan’s Sustainable Financing Framework has earned an excellent alignment score from Sustainable Fitch, certifying full compliance with global standards for green, social, and sustainable bonds and loans.”

Workers’ emigration up 43%

In September 2025, the Bureau of Emigration & Overseas Employment registered 73,545 workers, a 43% increase from 51,444 in August 2025, the report said.

The Pakistan Poverty Alleviation Fund, in partnership with 26 organisations, disbursed 5,370 interest-free loans worth Rs322.6 million during September 2025, it added.

Floods cause agri losses of Rs430bn

According to a preliminary assessment the recent flood has caused Rs430 billion losses to the agriculture sector, damaging crops: rice, cotton, sugarcane, maize, fodder and, vegetables, according to the monthly economic outlook..

“Nevertheless, recent indicators suggest that recovery efforts are underway supported by increased agricultural credit, higher machinery imports, and improved fertiliser offtake,” the ministry said.