ISLAMABAD: Pakistan’s inflation is expected to remain between 3–4% in June, the country’s finance ministry said in its monthly economic outlook report on Monday, reflecting a sharp decline from the record highs of 2023, when inflation peaked at 38% amid political turmoil and external account pressure.

Annual inflation rose to 3.5% in May 2025, up from just 0.3% in April, according to official data from the Pakistan Bureau of Statistics. However, it remains far below the 38% peak recorded in May 2023 amid political turmoil and external account pressure.

“Inflation is expected to remain within the range of 3.0–4.0 percent for June 2025,” the finance ministry said, citing stable food supplies and fiscal discipline.

The ministry said recent economic indicators showed signs of recovery, with increased lending to the private sector suggesting a pickup in production and business confidence. On the external front, it projected that higher remittances from overseas workers and a modest uptick in exports would help maintain a current account surplus for the full fiscal year ending June 30, 2025.

From July 2024 to April 2025, federal revenue growth outpaced expenditures, which the ministry attributed to the effectiveness of its fiscal reform measures. Net federal receipts grew by 44.4% to Rs8,124.2 billion, up from Rs5,627.5 billion a year earlier.

“The rise in revenues is primarily contributed by 68.1% growth in non-tax collections,” the report said. “Similarly, tax collection witnessed a significant increase, as in Jul-May FY2025, it grew by 25.9% to Rs10,233.9 billion from Rs8,125.7 billion last year.”

Breakdowns of tax categories showed a 33.8% increase in federal excise duty, a 27% rise in direct taxes, a 26.5% jump in sales tax, and a 16.3% increase in customs duties.

Independent analysts say the macroeconomic outlook is improving, though risks remain. 
Brokerage house Topline Securities estimated on Monday that June 2025 inflation will clock in at around 3.2%, compared to 12.6% in the same month last year. This would bring average inflation for FY2025 to 4.6%, a significant drop from 23.9% in FY2024.

On a month-on-month basis, Topline expects a slight 0.2% increase in overall prices, driven largely by a 0.4% rise in the housing index due to fuel cost adjustments in electricity bills. However, food prices are forecast to decline by 0.5%, led by falling poultry prices.

Within the sensitive price index (SPI) basket, sharp price increases were observed in tomatoes (59.3%), potatoes (26.4%), eggs (7.4%), fresh fruits (5.7%) and onions (5.0%), while notable declines were seen in chicken (-32.5%), fresh vegetables (-12.2%), LPG (-6.6%), vegetable ghee (-0.4%), and cooking oil (-0.4%).

Topline said the recently announced FY2026 federal budget was broadly non-inflationary, with minimal changes to the tax structure and no major new levies, in line with IMF-supported fiscal goals. However, it cautioned that the government’s move to raise fixed charges for domestic gas consumers could push inflation slightly higher in coming months.

With gas having a weight of about 1.1% in the urban consumer price index, the brokerage estimated the hike could result in a 23% month-on-month increase in the gas index, translating to a 0.85 percentage point uptick in headline inflation.

Looking ahead, Topline projected that average inflation for FY2026 would hover around 5.4%, assuming no major shocks to the domestic supply chain or global commodity prices. It also expects the central bank to keep interest rates steady, noting that the full impact of recent rate cuts, totaling 1,100 basis points, has yet to fully transmit through the economy.

KARACHI: Pakistan’s Finance Minister Muhammad Aurangzeb will discuss global finance challenges and meet policymakers from other countries at the Fourth International Conference on Financing for Development (FFD4) being held in Spain this week, the finance ministry said on Monday. 

The conference, which is being held from July 1 to 3 in Seville, will bring together leaders, policymakers and international development experts to explore innovative and sustainable financing strategies to accelerate progress toward Sustainable Development Goals (SDGs), particularly for developing and emerging economies, the finance ministry said. 

Aurangzeb is scheduled to take part in several key conferences and high-level side events, where he will present Pakistan’s take on the prevalent global finance issues and greater cooperation among nations. 

“The Finance Minister’s participation at FFD4 underscores Pakistan’s commitment to promoting innovative financing solutions, strengthening international cooperation, and enhancing the country’s voice in global development discourse,” the finance ministry said. 

Sharing details of the finance minister’s engagements at the conference, the ministry said he will co-chair the multi-stakeholder roundtable on ‘Leveraging Private Business and Finance’ on July 1 and deliver a keynote address at the International Business Forum Policy Dialogue on ‘Accelerating EMDEs Investment: The Role of Credit Ratings.’

The minister is also scheduled to address the General Debate of the conference and participate in the roundtable discussion on ‘Revitalizing International Development Cooperation,’ the ministry said. 

It added that as part of a UNICEF-hosted side event, Aurangzeb will speak on ‘Driving Capital Towards Children and Young People: A Dialogue on Innovative and Sustainable Financing for Children.’

It said the finance minister will also attend and speak as the chief guest at a special session titled ‘Swapping Out Debt for Development: The DCS Financing Approach,’ where he will highlight Pakistan’s perspectives on debt transformation and the potential of deposit protection mechanisms to support development finance.

He will also participate as a panelist at the International Business Forum’s side event on ‘Scaling Up SME Finance,’ focusing on enhanced financial inclusion for small and medium-sized enterprises, the ministry added. 

“In addition to his conference engagements, the Finance Minister will hold bilateral meetings with key international figures, including Mr. John W.H. Denton AO, Secretary-General of the International Chamber of Commerce, and H.E. Mr. Steven Collet, Vice Minister for Development of the Kingdom of the Netherlands,” the finance ministry said. 

Pakistan has been navigating a tricky path to recovery from a prolonged macroeconomic crisis that has weakened its foreign exchange reserves, drained its resources and triggered a balance of payments crisis. 

The government says it is committed to the reforms course, which includes privatizing state-owned enterprises incurring losses, widening the tax base and improving its energy sector.