The finance department expects inflation to remain in the 5-6% range in October

• The government records a surplus of Rs1.5tr during July-September.
• The report estimates damages of 430 billion rupees due to recent floods.
• Commodity prices increased due to supply disruptions, border closures.
  

ISLAMABAD: The Finance Department has forecast Consumer Price Index (CPI) inflation to remain in the range of 5-6% in October.

In this month’s Economic Update and Outlook report, the Finance Department said supply disruptions related to flooding and temporary border closures were putting “upward pressure” on the prices of some key commodities.

The forecast follows inflation of 5.6% in September, compared to 6.9% in the same month last year.

During the first quarter (July-September) of the financial year 2025-26, CPI inflation stood at 4.2%, against 9.2% in the corresponding period of the previous financial year.

The report acknowledged the impact of the recent floods, estimating losses at Rs 430 billion.

The agricultural sector was the most affected, with significant damage to rice, cotton, sugarcane, maize, animal feed and vegetables.

However, indicators point to a recovery in the sector, with farm credit disbursements growing 19.5% to Rs 404.2 billion in the first three months of FY2026, from Rs 338.2 billion in the previous fiscal.

Imports of agricultural machinery also increased during the period under review, rising 31.3% to $39.3 million, compared to $29.9 million last year.

The fiscal side registered a significant improvement, with the federal government registering a surplus of Rs 1.5 trillion in the first three months of the current fiscal year.

Exports registered an increase of 6.5% to $7.9 billion and workers’ remittances increased by 8.4% to $9.5 billion during the period under review.

While the report noted improved “macroeconomic figures”, it warned of inflationary pressures due to the impact of recent floods.

He also highlighted the importance of the recent Staff Level Agreement (SLA) with the International Monetary Fund (IMF).

According to the report, the successful negotiations with the global lender underlined the government’s strong policy performance and “firm commitment to reforms”.

Pakistan is currently making efforts to sign an agreement with the IMF to secure payment of $1.24 billion from the lender.