Floods May Nudge Inflation Up, But Economy Remains Stable: Finance Ministry

ISLAMABAD: The Ministry of Finance has cautioned that recent flooding could lead to a modest rise in inflation, although the overall economic outlook for the country remains stable.

In its latest Monthly Economic Update and Outlook, the ministry projected inflation to remain between 3.5% and 4.5%, noting that inflation stood at 3% in August and averaged 3.5% over the first two months of the fiscal year.

Monthly Economic Update and Outlook September 2025_250930_154949

Despite the impact of severe flooding in July, the report highlighted a decline in inflation, coupled with improved output in major industries — a sign of resilience in key sectors of the economy.

Read more: Inflation Hits 10-Month Peak, Prices Continue to Climb

The ministry credited the country’s primary fiscal surplus to stronger fiscal discipline, higher revenue collection, and better expenditure management.

New POL Prices 30 September 2025

In addition, exports, remittances, and foreign exchange reserves have remained stable, providing support to the external sector. Monetary conditions also remained stable, and a bullish stock market trend reflected growing investor confidence, the report added.

Overall, the Finance Ministry expressed optimism, citing sustained economic stability and steady growth despite recent climate-related disruptions.