Islamabad, January 27, 2026 — Pakistan’s inflation is projected to remain within the range of 5 to 6 percent in January 2026, as the country continues to witness improving macroeconomic stability and sustained growth momentum, according to the Ministry of Finance.
In its Monthly Economic Update & Outlook for January 2026, the Finance Division said the economy is well positioned to maintain growth during FY2026, supported by encouraging performance of Large Scale Manufacturing (LSM), robust remittances, and other high-frequency indicators. The report highlighted that prudent economic policies, structural reforms, and easing monetary conditions amid declining inflationary pressures have contributed to the positive outlook.
The ministry’s assessment comes after the State Bank of Pakistan (SBP) indicated that inflation could exceed 7 percent in some months during the second half of the fiscal year. Following the first Monetary Policy Committee (MPC) meeting of 2026, SBP Governor Jameel Ahmad announced that the central bank had kept the benchmark policy rate unchanged at 10.5 percent, citing faster-than-expected economic activity driven mainly by domestic-oriented sectors.
The SBP also revised Pakistan’s GDP growth forecast upward to a range of 3.75–4.75 percent for FY2026 and projected foreign exchange reserves to reach a record USD 20.2 billion by December 2026.
According to the Pakistan Bureau of Statistics, Consumer Price Index (CPI) inflation eased to 5.6 percent year-on-year in December 2025, while average inflation during July–December FY2026 stood at 5.2 percent, significantly lower than 7.2 percent in the same period last year.
The Finance Ministry reported that the economy completed the first half of FY2026 with contained inflation, a rebound in LSM growth, a stable exchange rate, and strengthened foreign exchange reserves. LSM grew by 6 percent during July–November FY2026, with November recording a strong 10.4 percent year-on-year increase.
On the fiscal side, Pakistan posted a fiscal and primary surplus during July–November FY2026, driven by a 7.8 percent rise in gross federal revenues and a sharp reduction in mark-up payments. Total expenditure declined by 6.2 percent, while development spending increased modestly.
Externally, the current account recorded a deficit of $1.2 billion during July–December FY2026, compared to a surplus last year. However, strong remittance inflows of $19.7 billion, up 10.6 percent, along with steady growth in IT and services exports, are expected to cushion external pressures.
The report concluded that Pakistan’s economy remains on a positive trajectory, with macroeconomic stability and reform momentum expected to support sustainable growth in the remainder of FY2026.