Pakistan’s Inflation Forecasted to Stay Moderate in July

The Ministry of Finance of Pakistan has predicted that consumer inflation will likely remain between 3.5% and 4.5% for July. This projection is based on the stability of prices and enhancements in supply dynamics, indicating a further moderation in inflationary pressures following the significant decline observed in the previous fiscal year.

According to the ministry’s recent monthly economic report, inflation was recorded at 3.2% in June. The average inflation rate for the fiscal year concluding on June 30 decreased substantially to 4.49%, marking a nine-year low, compared to 23.4% in the preceding year. It is important to note that Pakistan’s fiscal year commences on July 1.

The ministry anticipates that the nation’s economy will maintain its recovery trajectory in the initial months of fiscal year 2026. This expectation is supported by an enhanced macroeconomic environment and increasing confidence among investors.

The report suggests that large-scale manufacturing activity probably sustained its upward trend in June. This was attributed to increased private sector credit uptake and expanding levels of production. This positive momentum is expected to drive up imports of raw materials and intermediate goods, while simultaneously boosting value-added exports.

Strengthening internal demand, a consistent exchange rate, and stable global commodity costs are also expected to contribute to higher exports, remittances, and imports in July, thereby bolstering the stability of the external sector, according to the ministry.

However, the ministry has cautioned that the recent severe rainfall could present challenges to agricultural production and related supply chains. This could potentially have an impact on the inflation outlook in the near future.

Reports from the National Disaster Management Authority indicate that since June 26, incidents related to rain and flooding have resulted in at least 266 fatalities and over 630 injuries across the country, with 1,557 homes reported as destroyed.