The World Bank has projected Pakistan’s inflation rate to rise to 8.2% in fiscal year 2026-27, following an increase to 7.1% in the previous fiscal year, according to its 2026 economic report on Pakistan.
The report said Pakistan’s economy grew by 3.7% in FY2025-26, while economic growth is expected to reach 3.8% in FY2026-27.
Agriculture grew by 2.9%, supported by the livestock sector, while services recorded growth of 4.1%. Pakistan’s foreign exchange reserves reached $19.7 billion, and the overall fiscal deficit declined to 2.6% of GDP.
The report noted that S&P and Moody’s upgraded Pakistan’s credit ratings, while the country also issued $750 million and $3 billion in Eurobonds in international markets.
Average headline inflation increased from 4.5% in FY2024-25 to 7.1% in FY2025-26. The World Bank attributed the increased inflationary pressure partly to higher energy prices amid the Middle East conflict.
Average inflation reached 10.2% between March and June 2026, peaking at 11.7% in May. Food prices, particularly wheat and perishable food items, contributed to rising inflation in both urban and rural areas.
Between February and June 2026, petrol prices increased by around 36%, high-speed diesel by 31% and liquefied petroleum gas (LPG) by approximately 46%. Transport fares also rose by about 30% during the same period.
The report said the State Bank of Pakistan raised its policy rate to 11.5%. Average core inflation stood at 7.4% in urban areas and 8.5% in rural areas during FY2025-26, while urban core inflation reached 9% in May 2026.
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