Abdul Ghani

Pakistan’s inflationary pressures eased during the first seven months of the current fiscal year, with average consumer prices moderating to 5.2 percent, reflecting improved macroeconomic stability and coordinated fiscal, monetary and administrative measures.

According to the Monthly Development Update (February 2026) issued by the Economic Policy Wing of the Ministry of Planning, Development and Special Initiatives, average Consumer Price Index (CPI) inflation declined from 6.5 percent in Jul–Jan FY2024-25 to 5.2 percent during the same period of FY2025-26, indicating a noticeable improvement in price trends.

The report notes that the reduction in inflation reflects targeted efforts to manage prices and safeguard vulnerable segments of society. Measures aimed at strengthening fiscal discipline, maintaining prudent monetary conditions and improving administrative oversight have contributed to containing cost pressures across key consumer items.

While the overall trajectory remained downward, monthly data showed some short-term variation. Inflation in January 2026 rose to 5.8 percent, compared with the lower average recorded earlier in the fiscal year. The report attributes this increase to normal seasonal adjustments and evolving market conditions, underscoring the importance of continued policy coordination to maintain stability.

Despite the monthly uptick, the broader decline in average inflation suggests that price risks remain manageable. Compared with the same period last year, households experienced relatively lower increases in the cost of goods and services, supporting purchasing power and easing pressure on household budgets.

The improvement in CPI performance comes as economic activity gradually stabilises. A more moderate inflation environment typically helps businesses plan production and pricing decisions with greater certainty while allowing consumers to make spending choices without abrupt cost shocks.

The Planning Commission’s assessment highlights that sustained macroeconomic stability requires consistent monitoring of supply conditions and market behavior. Seasonal food price movements, transportation costs and shifts in demand patterns can still influence monthly inflation readings. Maintaining vigilance over these factors is therefore considered essential to preserving gains achieved so far.

Lower inflation also contributes to broader economic confidence. Stable prices help create a predictable environment for trade and commerce and support long-term planning across sectors. The report indicates that maintaining price stability remains a key element of the government’s overall economic management strategy.

With average CPI easing to 5.2 percent during Jul–Jan FY2025-26, the data suggest a more balanced price environment than last year. If the trend continues through the remainder of the fiscal year, Pakistan could sustain moderate inflation, reinforcing the foundation for steady, inclusive growth.

Credit: INP-WealthPk