Pakistan's inflation expected to remain in 5-6% range in October: report

ISLAMABAD: The Consumer Price Index (CPI)-based inflation in Pakistan is expected to remain in the range of 5-6% in October, the Finance Division said in its monthly economic report on Monday.

The report said that flood-related supply disruptions and temporary border closures put "upward pressure" on prices of a few essential commodities.

The projection follows September's 5.6% inflation, compared with 6.9% in the same month of last year.

During the first three months (July-September) of the fiscal year 2025-26, CPI inflation was recorded at 4.2%, against 9.2% during the same period of the last fiscal year.

The report acknowledged the impact of the recent floods, estimating losses to the tune of Rs430 billion.

The agriculture sector was hit the most, with major crops such as rice, cotton, sugarcane, maize, fodder, and vegetables sustaining significant damages.

However, indicators suggest a recovery in the sector, with agricultural credit disbursement jumping 19.5% to Rs404.2 billion during the first three months of FY2026, from Rs338.2 billion during the last fiscal year.

Imports of agricultural machinery also increased during the period under review, witnessing an increase of 31.3% to $39.3 million, compared with $29.9 million during the last fiscal year.

The fiscal side recorded a major improvement, with the federal government recording a surplus of Rs1.5 trillion during the first three months of the ongoing fiscal year.

Exports recorded a 6.5% increase to $7.9 billion, and workers' remittances went up 8.4% to $9.5 billion during the period under review.

While the report noted improved "macroeconomic fundamentals", it warned of inflationary pressures due to the impacts of the recent floods.

It also emphasised the importance of the recent Staff-Level Agreement (SLA) with the International Monetary Fund (IMF).

According to the report, the successful negotiations with the global lender underscored the government's strong policy performance and "steadfast reforms commitment".

Pakistan is currently making efforts to sign a deal with the IMF to secure a $1.24 billion payout from the lender.