Farooq Awan

Pakistan’s inflation data for December 2025 indicate a continued easing in overall price pressures, as headline inflation declined to 5.6 percent, reflecting a gradual moderation in price levels across major consumption categories, according to figures released by the Pakistan Bureau of Statistics (PBS).

On a month-on-month basis, consumer prices decreased by 0.4 percent, marking a further slowdown in inflationary momentum. The decline followed consecutive months of easing and points to a stabilisation trend in prices after prolonged inflationary pressures earlier in the year.

The data show that the slowdown in inflation was largely supported by falling food prices, which declined by 1.7 percent during the month. Food items such as vegetables, pulses and other perishables recorded notable price reductions, contributing significantly to the overall moderation in inflation. As a result, food inflation on a year-on-year basis eased to 3.2 percent in December.

Urban inflation stood at 5.8 percent, while rural inflation declined to 5.4 percent, reflecting a broad-based moderation across regions. The decline was more pronounced in rural areas, where food accounts for a higher share of household consumption.

Despite the easing in headline inflation, non-food components continued to exert upward pressure. Core inflation, which excludes volatile food and energy prices, remained elevated at 6.9 percent year-on-year. This indicates that underlying cost pressures, particularly in services and non-food categories, persist despite improvements in food price dynamics.

The data further show that housing, electricity, gas and other utilities recorded increases, partially offsetting the decline in food prices. Education and healthcare costs also remained elevated, contributing to the stickiness of overall inflation.

The December figures highlight a gradual cooling of inflationary pressures, supported by improved food supply conditions and easing price momentum. However, the persistence of higher costs in non-food categories suggests that inflationary pressures have not fully subsided.

Overall, the latest data point to a softening inflation trend, offering cautious optimism for price stability, while underlining the need for continued monitoring of non-food price dynamics in the months ahead.

Credit: INP-WealthPk