The International Monetary Fund (IMF) has projected that Pakistan’s average inflation will remain in single digits over the next six fiscal years, marking a significant improvement from the country’s previous inflationary challenges.
IMF expects average inflation for FY2024-25 to stay around 5.1%, notably lower than the government’s target of 12%. This sharp contrast highlights the growing gap between cautious fiscal planning and positive macroeconomic trends.
For the 2025-26 fiscal year, inflation is forecast to rise slightly to 7.7%, before easing to 6.5% in 2026-27. The IMF believes this downward trend will continue consistently, with inflation projected to remain at 6.5% annually through 2029-30. These projections suggest improved price stability and a more predictable economic environment for businesses and households.
This optimistic outlook comes in stark contrast to the country’s recent experience. Inflation surged to 29.2% in FY2022-23, among the highest in Pakistan’s history, before declining to 23.4% in FY2023-24. These surges were fueled by currency depreciation, global commodity shocks, and fiscal slippages during economic uncertainty.
Encouragingly, during the first 10 months of the current fiscal year, average inflation has remained at 4.73%, pointing to a cooling-off period in price pressures. This trend is likely influenced by a combination of tight monetary policy, improved food supply chains, and lower import costs amid currency stabilization.
The IMF’s projections offer hope for sustained economic recovery, although they are likely contingent on continued fiscal discipline, energy price management, and structural reforms. If maintained, single-digit inflation could ease the burden on low- and middle-income households and improve investor confidence in Pakistan’s economic outlook.