Pakistan inflation IMF forecasts 8.4% rate for FY2026-27

Pakistan inflation is expected to rise to 8.4% in FY2026-27, according to the International Monetary Fund (IMF). The forecast is slightly higher than the government’s 8.2% target and above the previous fiscal year’s average.

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The projection appears in the IMF’s latest country report on Pakistan. However, the Fund expects inflation to ease gradually over the following four fiscal years.

The IMF also projects that Pakistan will maintain single-digit inflation for the next five years. According to the report, inflation has already remained in single digits over the past two fiscal years.

IMF expects inflation to ease after FY2026-27

The IMF forecasts average inflation to fall to 6.6% in FY2027-28. It expects inflation to stabilise at around 6.5% annually between FY2028-29 and FY2030-31.

The projections suggest Pakistan could sustain a period of relatively stable prices after years of high inflation.

Pakistan recorded average inflation of 7.0% in FY2025-26. That figure was lower than the IMF’s earlier estimate. Inflation had already declined to 4.5% in FY2024-25 after peaking at 23.4% in FY2023-24 and 29.2% in FY2022-23.

The earlier surge resulted from currency depreciation, higher energy prices and external financing pressures.

IMF links outlook to ongoing economic reforms

The IMF said inflation may increase slightly this fiscal year because of energy price adjustments, tax measures and stronger domestic demand. Nevertheless, it expects the overall trend to remain moderate over the medium term.

The outlook comes as Pakistan continues reforms under its IMF-supported programme. The measures aim to strengthen public finances, rebuild foreign exchange reserves, improve tax collection and reduce structural weaknesses in the economy.

Meanwhile, the IMF projects Pakistan’s economy will grow by about 3.5% in FY2026-27. The government has set a slightly higher growth target.

The Fund also stressed the need for prudent fiscal and monetary policies to preserve economic stability and keep inflation expectations under control.

Economists say the IMF’s outlook indicates Pakistan could enter a period of lower and more predictable inflation if reforms continue and major external shocks remain limited.