Karachi, December 31, 2025 – Analysts at Arif Habib Limited have projected that Pakistan’s headline inflation for December 2025 is likely to ease to 5.8% year-on-year (YoY), down from 6.2% YoY in November 2025, though it remains above last year’s 4.1% YoY in November 2024.
Core inflation, measured as NFNE (Non-Food Non-Energy) inflation, is estimated at 7.8% YoY, showing moderation from 9.3% YoY in December 2024. On a calendar-year basis, average CPI inflation for 2025 is expected to settle at 3.54% YoY, the lowest in a decade, while NFNE inflation is projected at 7.96% YoY.
During 2025, monthly headline inflation averaged 0.48% month-on-month (MoM), with food inflation at 0.63% MoM. With December’s figures, 1HFY26 average headline inflation is projected at 5.1%, significantly lower than 7.3% in 1HFY25, while average NFNE inflation is expected to moderate to 7.5%, compared to 10.9% YoY in the same period last year.
On a monthly basis, overall inflation in December 2025 is expected to decline by 0.3% MoM, mainly driven by falling food and transportation costs. The food index is projected to contract by 1.4% MoM, led by lower prices of perishables such as tomatoes, onions, and potatoes. Similarly, the transportation index is expected to decline by 0.7% MoM, reflecting easing petroleum prices.
The moderation in headline and core inflation highlights improving price stability in Pakistan’s economy, though analysts caution that elevated core inflation indicates underlying cost pressures persist in key sectors.