Pakistan finance ministry projects October inflation at 9.5%-10.5% as FY27 outlook stays supportive

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Pakistan October inflation FY27

Highlights

Pakistan's finance ministry projects October 2026 headline inflation at 9.5%-10.5%, rising from 10.3% in September and 5.8% a year earlier.
FY27 recovery is expected to gain from improving agricultural output, selected manufacturing, domestic construction, higher machinery imports, and robust external earnings.
Improved external financing via successful Eurobond issuance, rising foreign direct investment, and remittance growth underpin rupee stability and bolster Pakistan's external position in FY27.

October inflation outlook and policy backdrop

As reported by Business Recorder, citing Pakistan's finance ministry in its Monthly Economic Update and Outlook for October 2026, headline inflation is projected in the range of 9.5% to 10.5% for the month, with the path ahead remaining sensitive to international energy prices, food supplies and base effects. Inflation stood at 10.3% in September 2026, compared with 5.8% a year earlier.

The ministry says the recovery in FY27 is expected to draw support from improving crop prospects, selected manufacturing industries, domestic construction activity and expanding external earnings. It adds that stronger agricultural output should support food processing, rural incomes and trade, while machinery imports are adding to productive capacity as investment projects move forward.

Fiscal policy remains focused on preserving stability through stronger revenue mobilisation, prudent expenditure management and targeted support for vulnerable groups, the ministry says. It adds that the fiscal surplus provides a useful starting point, while progress in tax administration, energy efficiency and state-owned enterprise reform is expected to support durable expansion and limit pressure on the external account.

External inflows support FY27 recovery

Pakistan's economy continues to consolidate macroeconomic stability during the first quarter of FY27, covering July to September, as stronger external inflows help sustain the recovery despite the ongoing Middle East crisis and higher international energy prices.

According to the ministry, the quarter's most encouraging development is improved external financing, including a successful sovereign Eurobond issuance and higher foreign direct investment. Growth in workers' remittances and services exports is also underpinning inflows with a durable stream of non-debt earnings.

These buffers help keep the rupee stable, reinforcing confidence in Pakistan's capacity to meet external obligations and absorb shocks. The stronger reserve position and wider access to external financing are also creating a more supportive environment for households, trade and investment through the rest of the fiscal year.

Our earlier report on Pakistan’s drive to expand priority-sector lending detailed the government’s push for banks to increase credit to housing, agriculture and SMEs, tying improved lending performance to access to state incentives. It outlined targets to lift farm credit and SME lending to Rs1.5 trillion each by June 2027, alongside steps such as faster processing, simplified documentation, risk-sharing arrangements and public-private partnerships to remove structural barriers to borrowing.

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