Pakistan’s consumer price inflation slowed to 5.6 per cent year-on-year in December, while prices fell every month, official data showed on Thursday.

The data comes after the State Bank of Pakistan (SBP) cut its key policy rate by 50 basis points to 10.5pc last month, breaking a four-meeting hold, in a move that surprised markets. All analysts polled by Reuters had expected rates to remain unchanged at the December meeting.

Inflation eased from 6.1pc in November and marked a sharp slowdown from levels that peaked above 30pc in 2023, according to official data.

Lower prices of perishable food items helped drive the monthly decline, the Pakistan Bureau of Statistics (PBS) said, with food prices falling 1.7pc 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 5.5-6.5pc in December.

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

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 the $7 billion loan programme.