Govt Expects Inflation to Remain High

Pakistan's government anticipates that inflation will persist at a high level in the near future, with an estimated 10 to 11 percent increase in the Consumer Price Index (CPI) for September FY2027, according to the latest Monthly Economic Update & Outlook released by the Finance Ministry's Economic Advisers Wing. The report highlights that the inflation situation is heavily influenced by international oil prices, which pose the primary risk to the economy due to their effect on purchasing power, production costs, and import expenses.

Economic activity is anticipated to accelerate in FY27 as recovery expands across agriculture, manufacturing, and private sector lending. The government projects that remittances, services exports, and higher foreign exchange reserves will continue to bolster household incomes and the external account. Additionally, a stronger buffer against external shocks is expected with enhanced foreign exchange reserves and renewed access to international capital markets.

In response to inflation, the government has implemented a targeted measure through the Prime Minister's Fuel Relief Scheme, which provides financial assistance to low-income households via a digital delivery system, without increasing the petroleum levy. The government's focus remains on accelerating revenue generation, maintaining relief measures as temporary and focused, and pursuing ongoing reforms in the energy and tax sectors.

These initiatives aim to bolster macroeconomic stability and lay the groundwork for enduring growth.