Pakistan’s Ministry of Finance has projected that inflation in September 2025 will remain within the range of 3.5% to 4.5%, even as the country grapples with the aftermath of severe flooding. The ministry’s monthly outlook, released on Tuesday, highlighted that despite disruptions caused by the extended monsoon season, overall economic activity has remained broadly stable.
The report noted that signs of resilience are visible in large-scale manufacturing, where growth is supported by encouraging indicators in cement dispatches, automobile production, and allied industries. These improvements are seen as vital for strengthening industrial momentum in the coming months, especially in light of challenges posed by natural disasters.
Pakistan has been facing unprecedented flooding since late June, which intensified through September, particularly hitting populous regions in Punjab. The natural calamity has disrupted agriculture and supply chains, raising concerns about short-term price pressures. However, the government emphasized that its inflation forecast for September remains contained within the projected band, suggesting that the broader economic outlook continues to be managed carefully.
The ministry’s assessment also underlined stability in the external sector. According to the outlook, the current account deficit is expected to remain at a manageable level despite higher import demand, thanks to multiple factors balancing external pressures. These include robust remittances, early signs of recovery in export growth, and declining global commodity prices that may help reduce the country’s import bill.
Nonetheless, officials acknowledged that flood-related disruptions could continue to exert temporary pressure on food supply chains, particularly in regions where agricultural fields have been inundated. This, in turn, may drive localized spikes in food prices. Even with these risks, the overall inflationary trend for September is projected to remain within the 3.5% to 4.5% band.
Data from the Pakistan Bureau of Statistics (PBS) shows that headline inflation stood at 3% year-on-year in August 2025, a decline from 4.1% recorded in July. The easing trend reflected stable global oil prices and improvements in some domestic supply lines before the floods intensified.
At the same time, the State Bank of Pakistan (SBP) has maintained a cautious monetary policy stance. In its latest Monetary Policy Committee (MPC) meeting, the central bank opted to keep the policy rate unchanged at 11%. The SBP highlighted that the flooding has created new uncertainties in the near-term macroeconomic outlook, but emphasized the importance of maintaining stability while allowing fiscal measures to support recovery.
Observers believe that while natural disasters have temporarily affected food supply chains and created inflationary risks, Pakistan’s economy continues to rely on its manufacturing rebound, external stability, and resilient remittance inflows to navigate the crisis. Policymakers appear focused on containing inflation without tightening conditions excessively, given the need to sustain economic growth amid disaster recovery.
The Finance Ministry’s outlook is being closely monitored by market participants and international lenders, who view Pakistan’s ability to balance inflationary pressures with growth as critical in the months ahead. The coming quarter will test whether industrial momentum and external sector resilience are enough to offset the lasting effects of one of the most damaging flood seasons in recent memory.
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