ISLAMABAD: The International Monetary Fund (IMF) has projected Pakistan’s average inflation at 8.4 percent in the current fiscal year (FY2026-27), placing it slightly above the government’s target as well as the average inflation recorded in the previous fiscal year. However, the Fund expects inflationary pressures to ease gradually over the following four fiscal years, with average inflation remaining firmly in single digits throughout the period.
The projections are contained in the IMF’s revised economic outlook, which estimates that Pakistan’s average inflation will remain below 10 percent over the next five fiscal years, reflecting expectations of greater macroeconomic stability and improved price conditions.
According to the report, average inflation during FY2026-27 is projected at 8.4 percent, marginally higher than the government’s target of 8.2 percent set for the current fiscal year. The IMF’s estimate also represents an increase from the average inflation recorded in FY2025-26.
Looking ahead, the IMF projects that average inflation will decline to 6.6 percent in FY2027-28 before easing further and stabilising at 6.5 percent annually during FY2028-29, FY2029-30 and FY2030-31. These projections indicate that inflation is expected to moderate steadily after the current fiscal year and remain broadly stable over the medium term.
The report further suggests that Pakistan is likely to maintain single-digit average inflation for five consecutive fiscal years, underscoring expectations of sustained price stability. This would extend the trend established over the previous two fiscal years, during which average inflation also remained in single digits following a period of exceptionally high price growth.
Pakistan recorded average inflation of 7.0 percent in FY2025-26, which was lower than the IMF’s projected average inflation of 8.4 percent for the current fiscal year. Before that, average inflation stood at 4.5 percent in FY2024-25 after declining sharply from 23.4 percent in FY2023-24 and an even higher 29.2 percent in FY2022-23, reflecting the country’s significant progress in bringing inflation under control after two years of severe price pressures.
The IMF’s latest projections indicate that although average inflation is expected to rise modestly during FY2026-27 compared with the previous fiscal year and remain slightly above the government’s target, it is forecast to decline from FY2027-28 onward.
The Fund expects inflation to remain broadly stable at around 6.5 percent over the following three fiscal years, suggesting a more predictable inflation environment if macroeconomic policies remain on track.
