Qudsia Bano

Pakistan’s December inflation data show a narrowing of price pressures across the economy, with fewer commodity groups contributing to overall inflation compared to previous months, according to figures released by the Pakistan Bureau of Statistics (PBS).

While headline inflation stood at 5.6 percent in December, the underlying data reveal that price increases were no longer broad-based across consumption categories. Instead, inflationary pressures were increasingly concentrated in a limited number of segments, while a growing number of items recorded stable or declining prices.

The dispersion of price movements narrowed during the month, as reflected in reduced volatility across food and non-food components. A significant number of consumer items recorded either marginal increases or outright declines, indicating a moderation in the breadth of inflationary pressures compared to earlier months when price increases were widespread.

Data show that several major commodity groups posted stable or declining prices on a month-on-month basis, while only a limited set of services and administered-price items continued to register upward movement. This pattern suggests a shift from generalized inflation toward more localized cost pressures.

The narrowing of inflation breadth was evident across both urban and rural markets, with fewer categories contributing significantly to price growth. This indicates a transition from broad-based inflation to more segmented price behaviour, where specific sectors—rather than the entire consumption basket—are driving inflation trends.

The concentration of price increases in fewer categories also suggests a moderation in inflation momentum. As fewer items exert upward pressure, overall inflation becomes more sensitive to developments in specific sectors than to widespread cost escalation.

The December data, therefore, point to a structural change in inflation dynamics, where the pace of price increases is becoming more contained and less widespread across the economy. While inflation remains elevated in certain components, the narrowing of price pressures signals a shift toward greater price stability in the broader economy.

Credit: INP-WealthPk