The interim government has targeted to bring down inflation to 6.5 per cent in the 2025–26 financial year despite the current inflation level remaining above 9 per cent.
Finance adviser Salehuddin Ahmed announced the target in a pre-recorded budget speech aired on Monday, while unveiling the proposed national budget for FY26.
He said that average inflation was expected to ease to a range between 6.5 and 5.5 per cent, supported by a tight monetary stance and cautious fiscal policies.
He said that real income had taken a hit over the past two years due to persistently high inflation, which began to surge following the outbreak of the Russia-Ukraine war.
Inflation climbed to 11.66 per cent in July 2024 — one of the highest rates in recent years.
To tackle this, the government has adopted a contractionary monetary policy over recent months, raising the policy rate by 150 basis points to 10 per cent, Salehuddin said.
He mentioned that fiscal policy had been adjusted in tandem, with public expenditure cut significantly by eliminating unnecessary costs.
The finance adviser claimed that the impact of these coordinated measures began to show, with the point-to-point inflation dropping from 10.89 per cent in December 2024 to 9.17 per cent in April 2025.
He also said that the market for essential commodities remained stable during Ramadan this year — a sign of improving economic conditions.
The adviser emphasised the need for maintaining a stable exchange rate in order to sustain progress in decreasing inflation.
Reflecting on the political and economic challenges faced after the July mass uprising, Salehuddin said that the interim government had to address high inflation, deteriorating law and order, labour unrest in the industrial sector and severe mismanagement in the banking system.
These issues stemmed from widespread corruption under the previous regime, he said.
