Weekly inflation rises 25.34%

Price hike driven by rupee’s free fall, increase in petroleum rates

KARACHI:

The weekly Sensitive Price Indicator (SPI) reading increased 25.34% in the week ended August 24, 2023 in the wake of rising food prices including wheat flour, rice, sugar and chicken, further denting the households’ purchasing power and putting pressure on their disposable income.

The good news, however, was that the increase in inflation slowed down to a 63-week low in the week on a year-on-year basis, Topline Research reported.

Major contributors to the rising inflation were the historic rupee devaluation, increase in petroleum product prices and an upward revision in power tariff, which may make it difficult for authorities to curb the price hike.

Pakistan Bureau of Statistics (PBS) reported that the SPI for the current week ticked up 0.05% compared to the previous week.

“During the week, out of 51 items, prices of 22 (43.14%) items increased, 12 (25.53%) items decreased and 17 (33.33%) items remained stable (compared to the previous week).”

Pakistan’s central bank on July 31, 2023 anticipated that average inflation in the current fiscal year would be in the range of 20-22% compared to 29% in the previous fiscal year.

Experts, however, noted that the outlook on annual inflation became volatile in the wake of latest free fall of the rupee, increase in petroleum product prices and a surge in power tariff.

The situation may force the central bank to further jack up its key policy rate – the cost of bank borrowing – to a new high in September 2023 from the current record high of 22%.

According to the PBS, the price of wheat flour increased by 129.38% in the week under review compared to the corresponding week of last year, gas charges for Q1 rose 108.38%, cigarettes 102.31%, tea (Lipton) 93.94%, Basmati rice broken 89.56%, chilli powder 86.05%, sugar 81.21%, Irri-6/9 rice 80.54%, gur 63.59%, chicken 48.58% and bread 46.37%.

The week, however, saw tomato price fall by 39.96%, onion 37.70%, electricity for Q1 21.96%, masoor pulse 10.68% and 1kg vegetable ghee 0.40%.

On a week- on-week basis, the PBS highlighted that a major increase was observed in prices of food items.

Resultantly, the price of onion went up by 23.56%, masoor pulse 3.66%, sugar 3.43%, garlic 2.17%, eggs 2.13%, cooked daal 2.04% and mash pulse 1.52%.

Among non-food items, energy saver bulbs became costlier by 1.89% and long cloth by 1.51%.