Farooq Awan

Pakistan’s headline inflation eased to 5.6 percent in December 2025, marking a further slowdown in overall price pressures, according to the latest figures released by the Pakistan Bureau of Statistics (PBS).

On a month-on-month basis, consumer prices declined by 0.4 percent, indicating a broad easing in inflation compared to November. The moderation reflects a general softening in price levels across several major consumption categories, contributing to the lowest inflation reading in several months.

The Consumer Price Index (CPI) showed that both urban and rural areas experienced a deceleration in inflation. Urban inflation stood at 5.8 percent in December, down from 6.1 percent in the previous month, while rural inflation declined to 5.4 percent from 6.3 percent. The easing across regions points to a broad-based slowdown rather than a sector-specific correction.

The data indicate that the overall decline was supported by reduced price pressures across multiple components of the consumption basket. While some categories continued to record increases, the overall impact was offset by reductions in other segments, leading to a net easing in headline inflation.

On an annual basis, the moderation in inflation reflects a gradual cooling trend observed over recent months. Compared to December last year, when inflation remained significantly higher, the current figures indicate improving price stability and easing cost pressures for households.

Despite the overall moderation, the PBS noted that certain components continued to exert upward pressure on the index, preventing a sharper decline in inflation. These persistent pressures underscore the uneven nature of the disinflation process, with some sectors adjusting more slowly than others.

The latest figures suggest that while price pressures are easing, the inflation outlook remains sensitive to changes in supply conditions, energy prices and broader economic factors. Analysts note that continued stability in key price drivers will be essential to sustain the downward trend in inflation in the coming months.

The December data marks an important point in the inflation trajectory, reflecting gradual stabilization in prices and offering cautious optimism for households and policymakers alike as the economy moves into the new year.

Credit: INP-WealthPk