IMF sees Pakistan inflation above target in FY2026-27

The International Monetary Fund (IMF) has projected that Pakistan's inflation rate will remain higher than the federal government's target during the fiscal year 2026-27

The International Monetary Fund (IMF) has projected that Pakistan’s inflation rate will remain higher than the federal government’s target during the fiscal year 2026-27, signaling continued pressure on consumer prices despite recent improvements in macroeconomic stability.

According to the IMF’s latest country report on Pakistan, average inflation is expected to exceed both the government’s official target and the estimated 8.4% average recorded in the previous fiscal year. The assessment indicates that while inflationary pressures have eased significantly compared to the highs witnessed in recent years, they are likely to remain a challenge in the short term.

The IMF, however, offered a more optimistic outlook for the medium term. The report forecasts that inflation will gradually decline over the following four fiscal years as economic reforms, prudent fiscal policies, and tighter monetary management begin to produce sustained results.

The Washington-based lender also expects Pakistan to maintain single-digit average inflation for the next five consecutive fiscal years. This projection follows the country’s recent return to relatively stable price growth after experiencing a prolonged period of elevated inflation driven by currency depreciation, rising energy costs, and global commodity price shocks.

According to the IMF, the continuation of single-digit inflation would mark a significant improvement in Pakistan’s economic outlook, provided the government remains committed to structural reforms and maintains fiscal discipline under the ongoing IMF-supported economic programme.

Economists say that keeping inflation under control will be critical for protecting household purchasing power, encouraging investment, and supporting long-term economic growth. However, they caution that external risks, fluctuations in global oil prices, and domestic supply-side challenges could still influence Pakistan’s inflation trajectory in the coming years.