Key points
- Inflation recorded at 4.1pc in December 2025
- This is the lowest figure in 80 months (since April 2018)
- Sharp decline in inflation is attributed to exchange rate stability
ISLAMABAD: Pakistan has seen a significant decline in inflation as well as in prices of essential items.
According to a statement issued by Pakistan’s Finance Division, inflation during the first six months of FY2025 (July-December) declined to 7.2 per cent compared to 28.8 per cent in the same period last year. In December 2025, inflation was recorded at 4.1 per cent, the lowest in 80 months (since April 2018, when it stood at 3.96 per cent).
Sharp decline
The sharp decline in inflation is attributed to exchange rate stability, prudent fiscal management, and improved supply arrangements for essential commodities.
Strict action against illegal foreign exchange companies, smuggling, and hoarding has helped stabilise the exchange rate, boost market confidence, and ensure a steady supply of goods.
The Sensitive Price Index (SPI), which tracks the weekly price movement of 51 essential items, has shown a continuous decline over the last four weeks of January 2025.
In the week ending on 23rd January 2025, the SPI decreased by 0.77 per cent.
During this period, prices of 12 items decreased, 14 increased, and 25 remained stable, indicating overall stability or a downward trend in the prices of essential goods.
Corrective measures
The Economic Coordination Committee (ECC) of Pakistan had observed an abnormal increase in the prices of pulses and chicken in early November and took corrective measures. As a result, the price of gram pulse declined by Rs52.5 per kg (from Rs411.3 to Rs358.8), and maash decreased by Rs37.4 per kg (from Rs528.3 to Rs490.9).
Similarly, chicken prices dropped by Rs20.1 per kg (from Rs460.6 to Rs440.5), and the price of a 20kg wheat flour bag fell significantly from Rs2,816.5 to Rs1,794.3, a reduction of Rs1,022.2.
Over the past four weeks, significant price reductions have been observed in tomatoes, potatoes, pulses, eggs, and LPG.
The latest data released by the Pakistan Bureau of Statistics (PBS) confirms that policy interventions, administrative measures, and relief efforts are effectively controlling inflationary pressures.
