Inflation to hover around 5-6% in November

November 28, 2025 (MLN): Inflation is expected to remain within the range of 5.0% to 6.0% in November, primarily driven by persisting pressures on food prices and agricultural output, according to the government's latest economic outlook.

This projection follows a slight uptick in headline inflation, which recorded 6.2% on a year-on-year basis in October 2025, rising from 5.6% the previous month.

The monthly increase of 1.8% was largely influenced by price hikes in key sectors, including education, health, and perishable food items.

Despite these immediate pressures, the outlook suggests that adequate input availability and government support measures for the Rabi season will help stabilize supplies moving forward.

Furthermore, global commodity markets are exhibiting a disinflationary trend, with the FAO Food Price Index declining to 126.4 points in October, down from 128.5 points in September.

In the real sector, economic activity is showing tangible signs of revitalization, particularly in Large-Scale Manufacturing (LSM), which registered a growth of 4.1% during the first quarter of FY2026 (July-September).

This recovery was broad-based, with 15 sectors recording positive growth, including textiles, food, and electrical equipment.

The automobile sector posted particularly striking numbers during the first four months of the fiscal year, supported by a substantial 70.9% increase in car production and a massive 96.9% surge in the production of trucks and buses.

Cement dispatches also reflected this uptick in industrial activity, rising by 15.5% cumulatively during the period, with domestic dispatches alone growing by 18.1% year-on-year.

On the fiscal front, the government has maintained strict discipline, achieving a significant milestone with the first quarterly reduction in public debt in over five years.

Public debt declined by over Rs1,371 billion, a move attributed to the strategic use of surplus funds to retire costly debt obligations.

This fiscal consolidation resulted in a primary surplus of Rs3,497.3 billion and an overall fiscal surplus of Rs1,338.2 billion for the first quarter.

Concurrently, agricultural credit disbursement jumped by 18.6% to Rs845.3 billion, although the sector faced mixed results with sugarcane production rising slightly while cotton and rice outputs declined due to various factors.

The external sector demonstrated resilience through robust remittance inflows, which surged by 9.3% to $13.0 billion during July-October FY2026, with Saudi Arabia and the UAE remaining the largest contributors.

IT exports also continued their upward trajectory, growing by 19.6% to $1.4 billion.

However, the current account posted a deficit of $733 million, widening from $206 million in the same period last year, largely due to a 9.6% increase in imports driven by the demands of a recovering industrial sector.

To ensure price stability amidst these dynamics, the Monetary Policy Committee maintained the policy rate at 11.0% in its recent meeting, adopting a cautious approach to navigate potential domestic supply frictions and global commodity volatility.

Meanwhile, the Pakistan Stock Exchange witnessed a correction in October, with the KSE-100 index declining by 3,862 points amidst market volatility.

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