By Moaaz Manzoor
Global prices are sending a mixed signal. Pakistan may see relief as easing energy and food costs are expected to support inflation and external stability, according to the Finance Division’s Monthly Economic Update & Outlook for October 2025.
Energy Costs Trend Lower Amid Global Changes
Energy costs are trending lower. The report said the international energy price index dropped by 0.5 percent in September. Australian coal prices fell 5.2 percent, while U.S. natural gas rose 2.2 percent, partially offsetting the drop. Meanwhile, metals rose 2.9 percent, and precious metals jumped 9.3 percent due to safe-haven demand. Fertiliser prices fell, while beverage prices stayed mostly steady.
Food Prices Ease Slightly, Supporting Inflation
Food prices are easing slightly. The FAO Food Price Index averaged 128.8 points in September, a bit below August’s figure. This was due to declines in cereals, dairy, sugar, and vegetable oils. According to the Finance Division, this moderation in food prices will help balance domestic price pressures caused by temporary supply disruptions from floods.
Global Disinflation Helps Pakistan Maintain Stability
Pakistan is benefiting from global disinflation. “Global disinflation is creating a favorable environment for Pakistan to sustain low inflation,” the report noted. Inflation in Pakistan averaged 4.2 percent during July–September FY2026, down from 9.2 percent last year.
Lower Energy Costs Boost Economy and Fiscal Position
Lower energy costs are boosting the economy. Economists said that easing international energy prices would help Pakistan’s current account balance and fiscal position. “A 1 percent decline in global oil prices saves hundreds of millions in import costs for Pakistan,” one analyst told this reporter.
Global financing is becoming more affordable. The report also highlighted the U.S. Federal Reserve’s recent rate cut, bringing its policy rate to 4.00–4.25 percent. This could gradually ease global financing conditions, letting emerging economies like Pakistan refinance debt at lower costs.
Risks and Stability in External Sector
Risks still linger. The Finance Division warned that commodity shocks from geopolitical tensions or climate events could still disrupt markets. “The global market remains vulnerable to supply disruptions that could reignite inflationary pressures,” it said.
External stability is holding steady. Pakistan’s external sector remains strong, supported by remittance inflows and steady export growth. The current account posted a $110 million surplus in September, while the State Bank of Pakistan’s reserves stood at $14.5 billion.
Price moderation supports the policy room. Economists said that global and domestic price alignment could allow the central bank to maintain an accommodative monetary stance without risking inflation. “Stable energy and food prices provide room for growth-supportive monetary policy,” a researcher in Lahore told this reporter.
Fiscal prudence and market stability are key. The Finance Division said that stabilizing global commodities, combined with careful fiscal management, positions Pakistan well for sustained disinflation and external balance. “Continued monitoring of international market trends will remain critical for maintaining price and exchange-rate stability,” it added.
Author Profile
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Moaaz Manzoor is a business correspondent who meticulously tracks Pakistan’s crucial but neglected natural resource industries.
He specializes in exposing inefficiencies and charting the course of modernization, highlighting how efforts to mechanize mining have dramatically cut marble and granite wastage, driving a recovery and attracting vital investment.
