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KARACHI: Pakistan’s finance ministry on Monday projected consumer inflation for July to remain in a 3.5-4.5% range, citing stable prices and improved supply conditions, as price pressures ease further after the previous fiscal year’s sharp decline.

Inflation stood at 3.2% in June, the ministry said in its monthly economic report, while average inflation for the fiscal year ending June 30 dropped to 4.49%, a nine-year low, from 23.4% the year before. Pakistan’s fiscal year begins on July 1.

The ministry said the economy is expected to sustain its recovery in the early months of fiscal year 2026, underpinned by an improved macroeconomic backdrop and growing investor confidence.

Large-scale manufacturing likely maintained momentum in June, supported by rising private sector credit offtake and expanding production activity, the report said. The rebound is expected to lift imports of raw materials and intermediate goods, while aiding value-added exports, it added.

Strengthening domestic demand, a stable exchange rate, and steady global commodity prices were also likely to boost exports, remittances and imports in July, reinforcing external sector stability, the ministry said.

However, it warned that recent heavy rains could pose risks to agricultural output and supply chains, potentially impacting the inflation outlook in the coming months.

Since June  26, rain- and flood-related incidents have killed at least 266 people and injured more than 630 nationwide, according to the National Disaster Management Authority, adding that 1,557 houses had been destroyed.

ISLAMABAD: Prime Minister Shehbaz Sharif directed provincial governments on Monday to fully cooperate with the center to move the country toward a “cashless” system, a statement from his office said as Islamabad attempts to digitize its economy for greater transparency. 

Pakistan is a cash-dominated market where a significant portion of transactions, particularly in the informal sector, are conducted using cash.

The country’s central bank has taken steps in recent months to ensure a transition toward a more cashless economy so that financial transactions are more traceable, reducing chances of tax evasion and corruption. Pakistan’s digital payments have also been on the rise. Since its 2021 launch, the central bank’s Raast system has processed over 892 million transactions worth Rs20 trillion ($72 billion).

Sharif held a weekly review meeting on Pakistan’s cashless economy and digitization efforts on Monday, the Prime Minister’s Office (PMO) said in a statement. 

“The federal government should hold meaningful consultations with the provincial governments for effective and comprehensive implementation of the digitization transformation plan,” the PMO quoted Sharif as saying following a review meeting on cashless and digital economy.

“He further directed that all provincial governments, including Gilgit-Baltistan and Azad Jammu & Kashmir, should fully cooperate with the federal government in digitizing the economy and moving toward a cashless system.”

The premier said that with coordination from provinces, the federal government’s digitization transformation plan should be made more efficient so that its goals are achieved within the stipulated time.

During the meeting, Sharif highlighted that digitizing the economy will enhance transparency and offer greater convenience to the public without incurring additional costs.

“The government is encouraging digital payments and digital transfer of funds through policy measures,” the PMO quoted him as saying. 

Pakistan launched the Merchant Onboarding Framework last week that requires banks and payment providers to equip all merchants with Raast-enabled digital payment tools such as QR codes and POS [Point of Sale] systems.

Earlier in July, Sharif ordered the doubling of all key digital economy targets including mobile-based payments, QR code adoption and overall transaction volumes as part of the same plan.

The government in May also approved setting up the Pakistan Digital Assets Authority to regulate blockchain-based financial infrastructure.

Pakistan, a country of over 240 million people, has a vast informal economy and low tax compliance. The government has long identified digitization as a key tool to improve governance, reduce corruption and expand the country’s narrow tax base.