Govt expects easing inflationary pressure in new fiscal year following reopening of Strait of Hormuz

ISLAMABAD: After inflation rose to a fresh peak of 12pc in June, the government expects inflationary pressures to ease in the new fiscal year following the opening of the Strait of Hormuz as peace efforts gather pace. “With geopolitical tensions expected to ease following the US-Iran ceasefire, Pakistan’s economic outlook for FY2027 is expected to improve further, supported by reform continuity, stronger confidence and a more enabling pro-business environment”, said the Ministry of Finance in its Monthly Economic Update and Outlook (June 2026). It said that the recent easing of geopolitical tensions and ongoing peace efforts in the Middle East had improved global market sentiment. “Consequently, international crude oil prices had eased from their recent highs. This was expected to reduce imported inflationary pressures and help lower domestic fuel and transportation costs,” the ministry noted. While anticipating June inflation, as measured by the consumer price index (CPI), to remain within the range of 11-12pc, the ministry said lower international oil prices would support Pakistan’s external account by containing the oil import bill. Reviewing the close of fiscal year 2025-26, it said macroeconomic stabilisation had largely been achieved and Pakistan’s economy was expected to maintain its growth momentum, supported by improving macroeconomic fundamentals, sustained expansion in manufacturing, particularly large-scale manufacturing (LSM), a stable external account, improved fiscal discipline, and continued resilience in the agriculture sector. “On the domestic front, prudent macroeconomic policies, continued fiscal consolidation, and targeted support for productive sectors are expected to sustain economic growth while preserving macroeconomic stability,” it said, adding that the external sector outlook had also strengthened further, supported by record workers’ remittances in May 2026 and continued growth in IT exports. Robust workers’ remittances and IT exports, i