ISLAMABAD: Pakistan’s inflation rate has decreased to its lowest point in more than six and a half years, with the consumer inflation rate slowing to 4.1 percent in December, according to recent reports.

According to Radio Pakistan, the Pakistan Bureau of Statistics reported that the country’s inflation rate has sharply declined, marking a significant moment as Pakistan embarks on a challenging economic recovery. This recovery is supported by a $7 billion facility from the International Monetary Fund that was granted in September last year.

The finance ministry had anticipated that the annual inflation rate would remain within the 4-5 percent range in the final month of the year. The inflation rate had already slowed to 4.9 percent in November, attributed largely to a high base a year earlier. This slowdown came in below the government’s forecast and was significantly lower than the multi-decade high of around 40 percent experienced in May 2023.

In a move to further support the economy, the State Bank of Pakistan reduced its key policy rate by 200 basis points to 13 percent in December. This marked the fifth consecutive reduction since June, contributing to a cumulative rate cut of 900 basis points for 2024, positioning it as one of the most aggressive central banks in emerging markets during the current easing cycle.

Inflation during the first half of the current fiscal year, ending June 2025, has averaged 7.22 percent, a significant decrease compared to 28.79 percent in the same period the previous year. The reduction in inflation rates is seen as a positive sign for Pakistan’s economic recovery efforts.