Pakistan’s Ministry of Finance has projected inflation rising to 7.5%-8.5% in the outgoing month of March 2026, as increasing global oil prices and the evolving geopolitical situation in Middle East might weigh on the commodity pricing trend in the country.
“Inflation is anticipated to remain within the range of 7.5-8.5% for March 2026,” the ministry said in its latest Monthly Economic Update & Outlook March 2026 published on Tuesday.
To recall, inflation reading hit almost a six-decade low at 0.7% a year ago in March 2025.
The rate of inflation surged to 7% on year-on-year (YoY) in the previous month of February 2026 that was the highest since October 2024. The consumer price index (CPI) was recorded at 5.8% in the prior month of January 2026.
The Monthly Economic Update & Outlook March 2026 reads, “While rising global oil prices and potential supply chain disruptions may exert pressure on industrial input costs, the government is actively pursuing prudent measures, including maintaining adequate petroleum reserves, managing energy demand, and adhering to fiscal austerity to protect domestic economy”.
A local research house Optimus Capital Management estimated that “NCPI [National CPI] might enter into double digits from April 2026, driven by base effect, spike in oil prices, lagged fuel cost spillovers to other sectors, and potential negative economic impact as the geopolitical situation prolongs.
“Continued government fuel subsidies may pressure fiscal and current account [balance] amid already tight fiscal space and high debt.”
Overall, NCPI is projected at 7.4% YoY in March 2026, “with the energy index crossing into double digits at 16.6% YoY after 17 months,” the research house said.
“Fuel prices surged 25% month-on-month in March 2026, combined with higher transportation costs. This is expected to contribute 65% of the headline MoM increase. Electricity prices should also add meaningfully, while food is expected to stay flat amid a supply glut from closed borders,” Optimus said.
Economic outlook cautiously optimistic
The Ministry of Finance’s monthly report further said the near-term outlook for Pakistan’s economy remains cautiously optimistic despite emerging geopolitical risks.
Recent data indicates improving momentum in the industrial sector, with higher imports of textile machinery, transport and construction related inputs, likely to translate into higher domestic industrial activity.
On the external front, high inflows of remittance are expected, particularly increase in transfers associated with Eid festival, “although their trajectory will depend on economic conditions in the host countries,” the report said.
“Encouraging trends in IT exports are also providing additional support to foreign exchange earnings.”
The current account deficit is likely to remain manageable, “while rising oil prices pose a risk to the import bill.”
Notwithstanding the downside risks amid global uncertainties, the latest indicators suggest that “the economy is better positioned to absorb external shocks and maintain overall resilience in the coming months”.
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