ISLAMABAD, Oct 27 (Wealth Pakistan) – Global commodity prices have shown mixed trends, with easing energy and food costs expected to support Pakistan’s inflation outlook and external stability, according to the Finance Division’s Monthly Economic Update & Outlook (October 2025).
Global price movements
The report said the international energy price index fell by 0.5 percent in September, mainly due to a 5.2 percent drop in Australian coal prices. This was partially offset by a 2.2 percent increase in U.S. natural gas prices. Metal prices rose 2.9 percent, while precious metals surged 9.3 percent as investors sought safe-haven assets. Fertilizer prices continued to decline, and beverage prices remained largely stable.
The FAO Food Price Index averaged 128.8 points in September, slightly lower than in August, reflecting declines in cereals, dairy, sugar, and vegetable oils. The Finance Division noted that this moderation in global food prices would help offset domestic price pressures caused by temporary supply disruptions following recent floods.
Inflation outlook
“Global disinflation is creating a favorable environment for Pakistan to sustain low inflation,” the report said. Inflation in Pakistan averaged 4.2 percent during July–September FY2026, down from 9.2 percent a year earlier.
Economists said easing international energy prices would support Pakistan’s current account and fiscal position. One analyst told Wealth Pakistan that even a one-percent drop in global oil prices could save hundreds of millions of dollars in import costs.
Financing and external conditions
The report highlighted that the U.S. Federal Reserve’s recent policy rate cut, reducing its benchmark rate to 4.00–4.25 percent, could gradually ease global financing conditions. This would allow emerging markets like Pakistan to refinance external debt on more favorable terms.
However, the Finance Division cautioned that risks remain due to potential commodity shocks from geopolitical tensions and climate-related disruptions. It warned that “the global market remains vulnerable to supply shocks that could reignite inflationary pressures.”
Impact on Pakistan’s external sector
Pakistan’s external position remains stable, supported by strong remittance inflows and steady export growth. The current account posted a surplus of 110 million dollars in September, while foreign-exchange reserves held by the State Bank of Pakistan stood at 14.5 billion dollars by mid-October.
Economists said that the alignment between global and domestic price moderation could allow the central bank to maintain an accommodative stance without triggering inflation. A Lahore-based researcher said that stable food and energy prices give room for growth-oriented monetary policy.
Outlook and policy implications
The Finance Division concluded that global commodity stabilization, supported by fiscal prudence, has positioned Pakistan well for sustained disinflation and external balance. It stressed that continuous monitoring of international market trends would remain essential for maintaining price and exchange-rate stability.