Pakistan's Finance Ministry expects inflation to ease to between 11 and 12 percent in June 2026, betting that lower global oil prices, improving external accounts and continued macroeconomic stability will reinforce economic growth as the country enters the next fiscal year.
In its Monthly Economic Update and Outlook for June 2026, the ministry projected that the Consumer Price Index (CPI) inflation rate would remain within the 11-12 percent range during June before gradually receding in the coming months. The outlook links the expected moderation primarily to declining international crude oil prices following easing geopolitical tensions in the Middle East. Lower energy prices are expected to reduce imported inflation while easing domestic fuel and transport costs.
The ministry's assessment follows an increase in headline inflation to 11.7 percent year-on-year in May 2026, which, according to Arif Habib Limited, marked the highest reading since June 2024. Officials argue that the anticipated decline in inflation will strengthen prospects for fiscal year 2026-27, during which the government has set an economic growth target of 4 percent. Pakistan's economy expanded by 3.7 percent in FY26, its highest growth rate in three years.
According to the report, macroeconomic stabilisation achieved during FY2025-26 is expected to provide the foundation for sustained economic expansion in the coming year. The ministry attributes this outlook to improving macroeconomic fundamentals, continued growth in large-scale manufacturing, a stable external account, stronger fiscal discipline and the resilience of the agricultural sector.
The report also notes that improving geopolitical conditions have contributed to a more favourable global economic environment. Ongoing peace efforts in the Middle East have strengthened market sentiment, leading to a decline in international crude oil prices from recent highs. Besides easing inflationary pressures, lower oil prices are expected to reduce Pakistan's import bill, providing additional support to the country's external account. On the domestic front, the ministry says prudent macroeconomic management, continued fiscal consolidation and targeted support for productive sectors are expected to sustain economic activity while preserving overall stability.
The external sector is also projected to remain a source of strength. The ministry highlights record workers' remittances of USD4.25 billion received in May 2026, alongside continued growth in information technology exports, as key factors expected to reinforce the balance of payments, strengthen foreign exchange reserves and improve resilience against external shocks. Overall, the ministry concludes that easing geopolitical risks, moderating global energy prices, improving external buffers and declining inflationary pressures are expected to support stronger economic growth in FY27 while maintaining macroeconomic stability.