Pakistan’s inflation is expected to stay between 5-6% in January 2026, the Finance Ministry said Tuesday. The ministry said Pakistan’s economy remains well positioned to sustain growth in FY26, supported by strong industrial performance and high-frequency economic indicators. Officials cited ongoing structural reforms and easing monetary pressures as key factors behind the positive outlook.
The Monthly Economic Update & Outlook January 2026 highlighted that prudent policies and lower inflationary pressures have boosted economic activity. The report emphasized that the manufacturing and domestic-oriented sectors continue to drive momentum, helping maintain macroeconomic stability. Finance officials noted that Pakistan’s growth trajectory is steadily improving despite global uncertainties.
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The State Bank of Pakistan projected inflation could exceed 7% in some months of FY26, but kept the benchmark rate unchanged at 10.5%. SBP Governor Jameel Ahmad revised the GDP growth forecast upward to 3.75-4.75% and indicated foreign exchange reserves may reach a record USD 20.2 billion by December 2026. This supports confidence in continued economic resilience.
On the external front, the Finance Ministry said the current account will remain in deficit, but strong remittances and stable IT and services exports will cushion pressures. Officials stressed that fiscal management improvements are helping stabilize the economy. These measures aim to sustain growth while keeping inflation moderate.
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The report also noted that December CPI fell by 0.4% month-on-month and 0.1% year-on-year, reflecting easing price pressures. The Finance Ministry said structural reforms, improved fiscal management, and supportive monetary policies will continue strengthening Pakistan’s economy throughout FY26.