World Bank projects Pakistan inflation to rise to 8.2% in FY27

The World Bank said on Thursday that Pakistan had made progress towards macroeconomic stability under its International Monetary Fund (IMF) programme, but warned that economic stability alone would not be enough to reduce poverty and unemployment.

ISLAMABAD: The World Bank said on Thursday that Pakistan had made progress towards macroeconomic stability under its International Monetary Fund (IMF) programme, but warned that economic stability alone would not be enough to reduce poverty and unemployment.

Inflation is projected to rise from 7.1% in fiscal year 2026 to 8.2% in fiscal year 2027, according to the bank’s latest Pakistan Development Update (PDU). Commodity prices are expected to remain high through the end of 2026, adding to transport costs and core inflation in the first half of FY27.

Food inflation is also expected to remain elevated because of wheat and perishable food prices, while the El Niño weather phenomenon poses an additional risk. The bank expects inflation to ease gradually later in the fiscal year, supported by favourable base effects, moderate demand and improved wheat availability.

The World Bank said structural reforms were needed to create jobs, raise incomes and reduce poverty.

“Growth is not generating jobs and creating only low-paid opportunities, and poverty has risen in Pakistan as 3.6 million reach working age every year but one in six new entrants into the job market has been left without work since 2018,” the report said.