Pakistan’s inflation is expected to stay in check in January, offering some relief to consumers after months of price pressures. The Finance Division on Tuesday projected inflation to remain between 5 and 6 percent for the month, pointing to signs of improving economic stability.
In its Monthly Economic Update and Outlook for January 2026, the Ministry of Finance said the economy appears well placed to maintain its growth pace during FY26. The report cited encouraging performance in large-scale manufacturing and other high-frequency indicators as key drivers behind the positive outlook.
Growth outlook improves amid easing inflation
According to the ministry, the improving trend reflects the impact of careful policy management, ongoing structural reforms, and easing monetary conditions as inflationary pressures cool. The assessment comes shortly after the State Bank of Pakistan (SBP) warned that inflation could rise above 7 percent in some months during the second half of the fiscal year.
SBP Governor Jameel Ahmad shared this view after the central bank’s first Monetary Policy Committee meeting of 2026 on Monday. The committee opted to keep the benchmark policy rate unchanged at 10.5 percent, noting that economic activity is picking up faster than earlier estimates, largely supported by domestic-focused sectors.
The central bank governor also struck an optimistic tone on growth, revising Pakistan’s GDP forecast to 3.75–4.75 percent for FY26. He added that foreign exchange reserves are expected to climb to a record USD 20.2 billion by the end of December 2026.
Recent inflation data supports the view of easing pressures. Figures released by the Pakistan Bureau of Statistics showed that the Consumer Price Index fell 0.4 percent on a month-on-month basis in December, while year-on-year inflation slipped 0.1 percent.
On the external front, the Finance Division acknowledged that the current account is likely to remain in deficit. However, strong remittance inflows and steady growth in IT and services exports are expected to soften external risks. The report added that improved fiscal management should continue to support broader macroeconomic stability in the months ahead.
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