The Finance Ministry projects inflation between 9.5% and 10.5% as rising global energy prices, food supplies and geopolitical tensions pose risks to economic stability.
ISLAMABAD, October 29, 2026: Pakistan’s headline inflation is projected to reach between 9.5% and 10.5% in October 2026, according to the Ministry of Finance, which has warned that international energy prices, food supplies and base effects will influence the inflation outlook.
In its Monthly Economic Update and Outlook for October 2026, the ministry said Pakistan’s economy continued to consolidate macroeconomic stability during the first quarter of fiscal year 2026-27, supported by stronger external inflows, improved agricultural prospects and disciplined public finances.
However, renewed tensions in the Middle East and persistently high international energy prices remain significant risks to the economic outlook.
The report noted that consumer price index (CPI) inflation eased to 10.3% year-on-year in September from 11.1% in August. However, inflation remained considerably higher than the 5.8% recorded in September 2025.
Transport prices increased by 27.4% year-on-year in September, while prices in the housing, water, electricity, gas and fuel category rose by 12.4%. Perishable and non-perishable food prices increased by 11.8% and 7.6%, respectively.
The ministry said improved agricultural supplies could help moderate food price pressures, although global energy market volatility continues to threaten price stability.
The State Bank of Pakistan raised its policy rate by 50 basis points to 12% effective October 27, 2026, to address rising inflationary risks and contain potential second-round effects from higher energy costs.
Pakistan’s economy also received support from stronger foreign inflows. Workers’ remittances increased by 14% to $10.9 billion during July-September FY2027, while goods exports rose by 7.7% to $8.5 billion.
The country recorded a $3.1 billion balance of payments surplus during the quarter, supported by a $3 billion sovereign Eurobond issuance and higher foreign direct investment.
On the domestic front, the report highlighted stronger maize, sugarcane and rice production during the Kharif season, although cotton output declined by 4.8% to 6.71 million bales.
The ministry expects economic recovery to draw support from agriculture, selected manufacturing industries, construction activity, services exports and remittances. Nevertheless, it cautioned that geopolitical tensions, volatile oil prices and trade disruptions could undermine the outlook.