By Bilal Hussain
Pakistan’s inflation rate rose 5.6% in December from a year earlier, according to the Pakistan Bureau of
Statistics.
The State Bank of Pakistan cut the policy rate by 50 basis points on Dec. 15 to support growth, citing stable price
pressures.
Food costs rose 3.24% last month from a year earlierwhile housing & energy prices climbed 6.86% in
December, bureau data showed.
Pakistan’s inflation rate rose slower-than-expected inDecember, justifying the central bank’s decision to cut its
policy rate to a three-year low to support growth.The consumer price index rose 5.6% in December from a year earlier, according to data released by the Pakistan
Bureau of Statistics on Thursday. That compares with a 5.8% median estimate in a Bloomberg survey. The reading was also lower than 6.1% in November.
The State Bank of Pakistan cut the policy rate by 50 basis
points on Dec. 15 to the lowest level in almost three years citing stable price pressures and a need to spur growth after holding rates steady for four straight policy meetings. The finance ministry forecast inflation of 5.5%- 6.5% for December.
Food costs rose 3.24% last month from a year earlier, slowing from 5.53% in November. Housing & energy
prices climbed 6.86% in December, compared with
5.34% a month earlier, bureau data showed. “We expect inflation to average 6.3% in FY26 and 4% in FY27, based on our assumptions of improved food
supplies, subdued international oil prices, and lower periodic energy price adjustments,” said Muhammad
Awais Ashraf, director AKD Securities Research. “However, fiscal slippages, global energy supply shocks,
and climate-change effects remain key risks to our inflation projections.” While tensions with Afghanistan led to border curbs that
disrupted trade, food supplies were largely made up from other sources and broader inflation pressures remained
contained. Islamabad had backed the Taliban takeover, betting that a friendly government in Kabul would rein
in Tehreek-e-Taliban Pakistan militants, but the group has since grown more emboldened, escalating its
insurgency across Pakistan’s tribal areas.