Pakistan inflation likely to stay within 5–6% in January, Finance Division says

Pakistan’s headline inflation is expected to remain within the 5.0–6.0% range in January 2026, according to the Finance Division’s Monthly Economic Update and Outlook released for January.

Consumer Price Index (CPI) inflation slowed to 5.6% year-on-year in December 2025, down from 6.1% in November, though higher than 4.1% recorded in December 2024. On average, inflation during July–December FY2026 stood at 5.2%, compared with 7.2% in the same period last year.

Education 9.9%, health 7.7%, non-perishable food items 7.5%, housing, water, electricity, gas and fuels 6.9%, and clothing and footwear 6.2% were among the main contributors to annual inflation. Restaurants and hotels 5.6% and transport 4.9% also added upward pressure. 

In contrast, prices of perishable food declined sharply by 20.1%, while recreation and culture fell by 4.3%.

Weekly price data showed some easing in short-term pressures. The Sensitive Price Indicator declined by 0.48% for the week ending January 22, 2026, with prices of 11 items falling, 12 rising and 28 remaining unchanged out of a basket of 51 essentials.

The Finance Division said Pakistan’s economy remains positioned to sustain growth momentum in FY2026, supported by improved large-scale manufacturing output and other high-frequency indicators. It attributed the outlook to easing inflation, supportive monetary conditions and ongoing structural reforms.

On the external side, the current account is projected to remain in deficit, though higher remittance inflows and stable performance in IT and services exports are expected to help cushion external pressures. Improved fiscal management is also expected to continue supporting macroeconomic stability, the report added.