Pakistan’s inflation rate cooled to 5.6% in December 2025 after staying over 6% during the previous two months, according to official data released on Thursday.
The number was in line with the analysts’ expectations, who had forecast the inflation to remain within the range of 5.8%.
Pakistan tracks inflation weekly and monthly. The weekly tracker is called the Sensitive Price Index (SPI), while the monthly inflation is tracked through the Consumer Price Index (CPI).
According to the Pakistan Bureau of Statistics, the CPI in December 2025 was higher than 4.1% in the same month last year. On a monthly basis, the inflation cooled from 6.1% in November.
During the first half of fiscal year 2026 (July-December), the average CPI reached 5.11%, a sharp decline from 7.29% during the same period last year.
In December, CPI inflation (Urban) increased by 5.8% on a year-on-year basis compared to an increase of 6.1% in the previous month and 4.4% in December 2024.
CPI inflation (Rural) increased by 5.4% on a year-on-year basis in December 2025, as compared to an increase of 6.3% in the previous month and 3.6% in December 2024.
Core inflation – which excludes prices of food and energy items – increased by 6.9% year-on-year in December 2025 as compared to 6.6% in the previous month and 8.1% in December 2024.
Rural core inflation increased by 8.1% year-on-year in December 2025 compared to 8.2% in the previous month and an increase of 10.7% in December 2024.
On a year-on-year basis, the biggest increase in December was registered in the price of sugar (26.69%). It was followed by wheat (25.27%), butter (24.12%), gas (22.91%), and fruits (19.62%).
The items whose prices reduced the most included tomatoes (52.56%), potatoes (42.79%), onions (28.85%), pulse gram (26.41%), and besan (26.03%).
The government and the State Bank of Pakistan (SBP) have projected cumulative inflation for fiscal year 2025-26 in the 5% to 7% range, citing improved economic conditions.
The headline inflation had dropped sharply to 4.5% year over year in FY25 from 23.4% in FY24 — its lowest level since FY18. The decline was attributed to lower electricity tariffs, adequate food supplies, favorable base effects, easing global commodity prices, and a market-determined exchange rate.
After its last meeting in December, the SBP’s Monetary Policy Committee noted the average inflation remained within the target range of 5-7% from July to November.
The committee kept its inflation outlook "unchanged" due to lower global commodity prices and a "prudent monetary policy stance".
The inflation number is expected to reduce next month due to back-to-back cuts in the prices of diesel and a reduction of around PKR 10 in the price of petrol on December 31.
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