Pakistan’s consumer price index (CPI) recorded a year-on-year inflation rate of 5.6% in December 2025, aligning closely with the Finance Ministry’s projections.
This figure represents a slight slowdown from November’s 6.1%, indicating a moderating trend in price pressures amid ongoing economic reforms.
Year-on-Year Trends
The December 2025 inflation rate marks an increase from 4.1% in December 2024, reflecting persistent but controlled inflationary forces.
Urban areas experienced a 5.8% year-on-year rise, down from 6.1% in November. Rural inflation stood at 5.4%, a decrease from the previous month’s 6.3%.
These variations highlight regional differences in cost-of-living adjustments. For the first half of FY26, average inflation averaged 5.15%, a notable drop from 7.22% in the same period last year. This improvement stems from prudent fiscal policies and stabilized supply chains.
Analysts note that base effects from prior years contributed to the moderated pace. Brokerage houses like Topline Securities and JS Global had anticipated rates around 5.75-6.0%, showing the actual figure met market expectations.
Month-on-Month Developments
On a month-on-month basis, CPI fell by 0.4% in December 2025, reversing November’s 0.4% increase. Urban regions saw a 0.4% decline, compared to a 0.5% rise the prior month. Rural areas reported a steeper 0.6% drop, against November’s 0.2% growth.
This deflationary MoM trend suggests seasonal factors, such as lower food prices post-harvest. Compared to December 2024’s 0.1% MoM increase, the current dip indicates better price stability. The Finance Ministry attributed the moderate inflation to effective base effects and supply management.
However, global commodity fluctuations could influence future readings. Overall, the data points to a resilient economy, with inflation easing toward single digits. This supports the State Bank’s decision to maintain policy rates, fostering growth without overheating.
Stakeholders view this as a positive signal for consumer confidence and investment. Continued monitoring of external factors, like oil prices, remains crucial. The government’s structural reforms are credited for this downward trajectory. Economists predict sustained moderation if fiscal discipline persists.
This inflation level aids in planning for FY26’s economic targets.