ISLAMABAD (Dunya News) – The International Monetary Fund (IMF) has projected that Pakistan’s inflation rate will rise to 8.4% during the current fiscal year 2026-27, exceeding both the government’s target and the level recorded in the previous fiscal year.
The forecast was made in the IMF’s latest country report on Pakistan, which also projected that inflation would decline from the current fiscal year’s level over the following four financial years.
The IMF further estimated that Pakistan’s average inflation will remain in the single-digit range for the next five consecutive years. According to the report, average inflation remained in single digits over the past two fiscal years, and the Fund expects this trend to continue over the medium term.
According to the IMF's latest economic outlook, average inflation is expected to reach 8.4% in FY2026-27, slightly above the federal government's target of 8.2% for the current fiscal year. However, the Fund expects inflationary pressures to gradually ease thereafter.
The IMF forecasts average inflation to decline to 6.6% in FY2027-28 before stabilising at around 6.5% annually during FY2028-29, FY2029-30 and FY2030-31, suggesting a sustained period of relative price stability.
The projections indicate that Pakistan could maintain single-digit inflation for at least five consecutive years, extending a trend that began after the country emerged from one of its worst inflationary episodes in decades.
Pakistan's average inflation stood at 7.0% in FY2025-26, lower than the IMF's earlier forecast, following a sharp decline from 23.4% in FY2023-24 and 29.2% in FY2022-23, when the country faced severe price pressures amid currency depreciation, high energy costs and external financing challenges. Average inflation had already eased to 4.5% in FY2024-25 as economic conditions began to stabilise.
The IMF noted that while inflation is likely to edge up modestly during the current fiscal year due to adjustments in energy prices, taxation measures and recovering domestic demand, the broader trend points toward moderation over the medium term.
The outlook comes as Pakistan continues implementing reforms under its IMF-supported programme aimed at strengthening public finances, rebuilding foreign exchange reserves, improving tax collection and reducing structural vulnerabilities in the economy.
In its broader assessment, the IMF has projected Pakistan's economic growth at around 3.5% for FY2026-27, while government authorities have set a somewhat higher growth target. The Fund has also emphasised the importance of maintaining prudent monetary and fiscal policies to preserve recent gains in economic stability and keep inflation expectations anchored.
Economists say the IMF's projections suggest that, provided reform momentum continues and external shocks remain limited, Pakistan may be entering a period of lower and more predictable inflation after years of economic volatility.