Pakistan’s Finance Division projects inflation to remain between 4 and 5 percent in August 2025. This forecast was released in the latest monthly economic outlook on Thursday. However, the report warns that ongoing flood damage may create risks for the economy. The floods could strain fiscal resources and disrupt food supplies in affected areas.
In July 2025, Pakistan’s Consumer Price Index (CPI) inflation stood at 4.1 percent year-on-year. This is a rise from 3.2 percent in June 2025 but remains well below the 11.1 percent inflation recorded in July 2024. The report credits improved price stability to macroeconomic adjustments after the \$7 billion IMF bailout in September 2024.
The Finance Division highlighted improved economic conditions as Pakistan entered fiscal year 2026. The country shows a stronger external position, better fiscal balance, and revived investor confidence. The outlook described the economy as moving positively, with growth supported by stable macroeconomic fundamentals.
Still, recent floods in Punjab pose a serious threat. Heavy rains caused 17 deaths and submerged over 1,600 villages. Over one million people have been displaced. Authorities worry that downstream flooding could further damage agriculture and supply chains, hurting rural livelihoods.
Despite these risks, the Finance Division remains cautiously optimistic. A favorable global environment, stronger demand from trade partners, and a new trade deal with the United States may boost exports. At home, business reforms and supportive monetary policies aim to strengthen private sector growth and keep inflation under control.