According to data released by the Pakistan Bureau of Statistics (PBS) on January 1, 2026, headline Consumer Price Index (CPI) inflation stood at 5.6% on a year-on-year (YoY) basis in December 2025. This marks a decrease from 6.1% recorded in November 2025, offering relief amid ongoing economic stabilization efforts. However, it remains higher than the 4.1% registered in December 2024. On a month-on-month (MoM) basis, CPI fell by 0.4%, driven primarily by lower prices of perishable food items. Urban CPI inflation was 5.8% YoY (down from 6.1% in November), with a 0.4% MoM decline, while rural CPI stood at 5.4% YoY (down from 6.3%), showing a sharper 0.6% MoM drop. The Sensitive Price Indicator (SPI) eased to 2.5% YoY, and the Wholesale Price Index (WPI) further moderated to 0.6% YoY, reflecting subdued wholesale pressures.
Core Inflation Trends and Broader Implications
Core inflation, excluding volatile food and energy items (NFNE), presented a mixed picture: urban core rose slightly to 6.9% YoY from 6.6% in November, indicating persistent underlying pressures in non-food sectors, while rural core edged down to 8.1%. The monthly decline in headline CPI was largely attributed to falling perishable food prices, which dropped 1.7% MoM across urban and rural areas. This moderation aligns with government policies aimed at price stability, though analysts note that inflation for 2025 averaged low single digits, the lowest in a decade. The State Bank of Pakistan’s recent rate cuts reflect confidence in cooling pressures, but elevated core rates suggest caution against premature easing, as highlighted by IMF observations.