Pakistan’s headline inflation is expected to ease in December 2025, with the Consumer Price Index projected between 5.75 and 6.25 percent. Topline Pakistan Research reported this decline comes after November’s 6.15 percent reading, though it remains higher than December 2024’s 4.07 percent. Analysts said subdued food prices and lower housing and utility costs are driving the moderation.
Food prices are forecast to fall 1.4 percent month-on-month, led by declines in potatoes, onions, tomatoes, sugar, and fresh vegetables. Meanwhile, housing, water, and electricity costs are expected to rise 0.75 percent due to higher LPG and solid fuel prices. Transport costs are projected largely unchanged, with fuel prices declining marginally by 0.1 percent.
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Overall annual inflation for 2025 is expected to average 3.54 percent, the lowest in a decade. This is a sharp drop from 2024’s 13.13 percent, showing disinflation across the economy. Analysts said the trend reflects controlled food costs and reduced pressure from utilities and housing, despite flood-related disruptions.
Inflation in the second half of FY26 is projected to rise, averaging around 9 percent, with June 2026 near 11 percent. It is expected to gradually converge toward the central bank’s medium-term target of 5–7 percent. Experts warned that global commodity price movements could significantly alter this outlook.
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Following a surprise 50 basis points policy rate cut, the real interest rate stands at roughly 450 basis points, above historical averages. Analysts stressed that monitoring food, energy, and transport sectors is crucial to maintain stable prices. Policy measures and risk management remain key to controlling inflation in the coming months.