Pakistan CPI Inflation Slows to 5.6% in December

Karachi (Reuters) — January 2, 2026: Pakistan’s consumer price inflation eased to 5.6 percent year-on-year in December, marking a further slowdown in price pressures, according to official data released by the Pakistan Bureau of Statistics (PBS) on Thursday.

The latest reading shows a decline from 6.1 percent recorded in November and reflects a sharp moderation from inflation levels that surged above 30 percent during 2023. On a month-on-month basis, overall prices also registered a decline, largely due to lower food costs.

Key Developments

• Pakistan’s CPI inflation slowed to 5.6% year-on-year in December, down from 6.1% in November.
• Food prices declined 1.7% month-on-month, driven by lower perishable food costs across urban and rural areas.
• The easing comes after the State Bank cut the policy rate to 10.5%, despite warnings that core inflation remains sticky.

PBS data revealed that food prices fell by 1.7 percent in December compared to the previous month, driven by a drop in the prices of perishable items across both urban and rural areas. The easing in food inflation played a key role in pulling down the overall CPI figure.

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The development comes after the State Bank of Pakistan (SBP) cut its key policy rate by 50 basis points to 10.5 percent last month, ending a four-meeting pause. The decision had surprised market participants, as analysts surveyed by Reuters had largely expected the central bank to keep rates unchanged.

Earlier, the finance ministry had projected December inflation to remain within the range of 5.5 to 6.5 percent, a forecast that aligns closely with the latest data.

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While headline inflation has stayed within the SBP’s target range of 5 to 7 percent during the July–November period, the central bank has cautioned that core inflation remains persistent. It has also warned that headline inflation could see a temporary uptick towards the end of the current fiscal year, which concludes in June, due to base effects.

Meanwhile, non-food inflation continued to remain elevated in both urban and rural areas in December, highlighting ongoing underlying price pressures. The SBP has maintained that the overall inflation outlook remains broadly unchanged, while the International Monetary Fund has advised Pakistan to avoid premature monetary easing under its ongoing $7 billion loan programme.

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