The International Monetary Fund (IMF) has raised Pakistan’s inflation forecast for the current fiscal year to 9.9%, signalling growing price pressures across the economy. The revised estimate exceeds the government’s target of 8.2%, while the lender has maintained its economic growth projection at 3.5%.
The IMF released its latest estimates in the World Economic Outlook on Tuesday, October 13, 2026, during the World Bank-IMF Annual Meetings in Bangkok.
Inflation Forecast Rises From Earlier Estimate
The IMF previously projected Pakistan’s inflation rate at 8.4% for FY2026-27. It retained that estimate in its July outlook before increasing it by 1.5 percentage points in its latest assessment.
The lender did not provide a Pakistan-specific explanation for the revision. However, it raised inflation projections for the Middle East and Central Asia amid regional conflict, energy supply disruptions and rising prices.
Higher energy costs can increase transportation, electricity and production expenses. Businesses may then pass some of these additional costs on to consumers, putting further pressure on household budgets.
Government Faces Challenge Meeting Inflation Target
Pakistan’s government and the State Bank have maintained that the country can achieve its annual inflation target despite emerging price pressures.
Meanwhile, the government has continued passing higher fuel costs on to consumers. It has also introduced monthly assistance of Rs2,000 for motorcyclists and Rs3,000 for small-car owners.
However, the IMF has raised concerns about the relief scheme, describing it as broad-based and costly. The latest inflation projection adds another challenge for policymakers seeking to balance public relief with fiscal discipline.
IMF Keeps Economic Growth Forecast at 3.5%
Alongside its inflation revision, the IMF maintained Pakistan’s economic growth forecast at 3.5%. This remains below the government’s target of 4% for the current fiscal year.
Finance Minister Muhammad Aurangzeb has expressed confidence that economic growth could exceed 4%. He recently told Reuters that he remained optimistic about the country’s growth prospects.
The difference between the government’s target and the IMF’s projection highlights uncertainty surrounding Pakistan’s economic outlook.
Higher Inflation Could Pressure Monetary Policy
The revised forecast could complicate decisions on interest rates as policymakers attempt to control inflation without weakening economic activity.
However, the IMF’s latest outlook does not explicitly call for an interest rate increase in Pakistan. The impact will depend on how domestic prices, fuel costs and broader economic conditions develop in the coming months.
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