Pakistan inflation slows to 5.6 percent in December nationwide trends

KARACHI – Pakistan’s consumer price inflation eased to 5.6 percent year-on-year in December, with prices also declining month-on-month, according to official figures released Thursday.

The slowdown followed a surprise decision by the central bank last month to cut its key policy rate by 50 basis points to 10.5 percent, ending a four-meeting pause. Market expectations, based on a Reuter’s poll, had pointed to no change in rates at the December meeting.

Inflation cooled from 6.1 percent in November and reflected a sharp retreat from the highs seen in 2023, when price pressures surged beyond 30 percent, official data showed.

Lower prices of perishable food ⁠items helped drive the monthly decline, the Pakistan Bureau of ‌Statistics said, with food prices falling ‍1.7% month-on-month in ‍December, led by declines in both urban and ‍rural areas.

The finance ministry had said on Wednesday that inflation was expected to remain moderate at 5.5%–6.5% in December.

The State Bank of Pakistan has said inflation stayed within its 5%–7% target range during the July–November period but warned that ⁠core inflation remains sticky and headline inflation could rise temporarily toward the end of this fiscal year, which ends in June, due to base effects.

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Non-food inflation remained elevated in both urban and rural areas in December, underscoring the central bank’s concerns over persistent underlying price pressures.

The central bank has said the inflation outlook remains broadly unchanged, while the International Monetary Fund has cautioned against ‌premature monetary easing under Pakistan’s $7 billion loan program.