Pakistan’s inflation rises to 6.2% in October on rising food prices

Pakistan’s consumer price inflation accelerated to 6.2% year-on-year in October, the highest reading in 12 months, data showed on Monday, as food prices rose following floods and temporary border disruptions strained supply chains.

On a month-on-month basis, prices were up 1.8%, the Pakistan Bureau of Statistics said. The data came a week after the State Bank of Pakistan (SBP) kept its key policy rate unchanged at 11 per cent for a fourth straight meeting, saying inflation was expected to stay above its 5% to 7% target range for a few months before easing next fiscal year.

Inflation has moderated from nearly 30 per cent a year ago to below 6 per cent in mid-2025 before edging up again, as the fading base effect and temporary supply shocks began to lift prices.

Last week the government forecast inflation in the 5% to 6% range for October, noting that flood-related supply pressures and border closures with Afghanistan had pushed up prices of some essential goods. Floods in August swamped farmland and industrial hubs in Punjab, killing more than 1,000 people, displacing 2.5 million and damaging crops and factories, tightening food supplies across the country. The pressure was compounded by border clashes with Afghanistan that shut major crossings used for food and fuel trade. The two countries later agreed to extend a ceasefire, but crossings remained restricted after October 11, disrupting commerce and deepening shortages in Pakistan’s northwestern regions.

The central bank said the overall economic outlook had improved, with better-than-expected crop yields, stronger industrial activity and a rebound in high-frequency indicators, though risks from global commodity volatility and domestic energy prices remain.

A private survey, meanwhile, showed manufacturing activity contracted for a second straight month in October, though the pace of decline slowed.

The HBL Pakistan Manufacturing PMI rose to 49.6 from 48.0 in September, with firms citing weak demand, higher taxes and power outages as key drags, even as business confidence remained cautiously optimistic. A reading below 50 indicates a contraction.

The International Monetary Fund (IMF) said economic activity in the Mena region and Pakistan has been stronger than expected, projecting a growth of 3.2 per cent in 2025, up from 2.1 per cent in 2024, and higher than its April forecast.

“Oil exporters have benefited from higher oil output following the faster unwinding of Opec+ cuts. Oil importers and Pakistan have gained from low energy prices, strong remittances, and a vibrant tourism sector, all supporting domestic demand.

Looking ahead, growth is expected to rise to 3.7 per cent in 2026, while inflation should remain moderate, helped by lower food and energy prices and tight monetary policies,” Jihad Azour, Director of the Middle East and Central Asia Department at IMF, told a press briefing about the latest economic outlook for the Middle East, North Africa, Pakistan and the Caucasus and Central Asia (CCA) on the sidelines of the 2025 Annual Meetings.

“In the CCA, growth is also expected to be driven by strong consumption, credit expansion, and steady hydrocarbon exports.”

“We project average growth of 5.6 per cent this year before easing gradually to about 4 per cent over the medium term as hydrocarbon production stabilises and fiscal consolidations take hold,” Azour said.

Despite the year marked by trade tensions and regional conflict he noted that economies of the Middle East, North Africa, Pakistan and the Caucuses in Central Asia have shown resilience.

Growth has held better than expected and the impact of higher US tariffs and geopolitical tensions has been short-lived.

Exchange rates, he added, have adjusted smoothly, sovereign spreads have narrowed, and several countries have successfully returned to international bond market.

Inflation, however, remains mixed, easing in most Mena economies and Pakistan, but accelerating and still elevated in many CCA countries due to robust demand and important price pressures.

“Overall, the outlook is positive but not without risks. In Mena and Pakistan, growth should continue to strengthen, supported by reforms and resilient domestic demand. In the CCA, growth will moderate to a more sustainable pace while inflation gradually declines.’’

However, he continued, downside risks remain. Significant recent shocks and still elevated global uncertainty could undermine demand and induce global economic slowdown or tightening global financial conditions.

Persistent inflation and concerns about fiscal sustainability in advanced economy could raise borrowing costs, especially for countries in our regions with large financing needs. The region remains exposed to geopolitical tensions and climate-related shocks, which could disrupt activity.

Agencies