Weekly inflation eases 1.7% over oil price fall

Lower dollar rate also supports decrease in SPI reading

ISLAMABAD:

Owing to the reduction in prices of petroleum products in line with global trend and the fall in dollar rate in the wake of a crackdown on currency smugglers and hoarders, the inflation rate has come down in Pakistan, which will provide some relief to people in the current challenging times.

During the week ended on October 19, 2023, the inflation rate, measured by the Sensitive Price Indicator (SPI), fell 1.7% compared to the previous week. On an annual basis, the inflation decreased from 38.28% to 35.45%.

According to the weekly report of Pakistan Bureau of Statistics (PBS), prices of 24 items dropped during the week under review while prices of 14 items increased. Rates of the remaining 13 items in the SPI basket remained unchanged.

The price of 1kg onion fell by Rs9.48 and the price of chicken decreased by Rs20.6. Similarly, the price of lentil dipped Rs11.03 per kg. Prices of tea and rice also fell during the week.

However, rates of 14 items including eggs, mutton and beef increased while bread and milk powder saw no change in their rates.

Read After oil price cut, traders seek energy tariff reduction

Earlier in October, it was reported that the monthly inflation, measured by the Consumer Price Index (CPI), bounced back to 31.4% in September – the highest in four months – due to an administrated increase in prices of electricity and fuel.

It hit the consumers hard at a time when poverty and unemployment were already sharply higher. The CPI primarily rose due to increase in energy prices, as the pace of rise in perishable food items slowed down to single digit.

A unit of electricity is now 164% more expensive compared to September last year. Similarly, the gas price was 63% higher than a year ago, even before the upcoming increase in gas prices.

Petrol is also far more expensive than a year ago, selling for Rs283 per litre. Prices of non-perishable food items, like politically sensitive sugar, remained on an upward trajectory. The CPI reading suggests that the government and the State Bank of Pakistan are once again set to miss the annual inflation target of 21% by a wide margin despite inflicting heavy costs on the exchequer and businesses by keeping interest rate high at 22%.

Published in The Express Tribune, October 21^st, 2023.

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