SPI inches down, but still elevated
In the week ending Thursday, the Sensitive Price Indicator (SPI) recorded a marginal 0.06% decline compared to the previous week, offering a slight reprieve. However, despite this minor dip, the weekly inflation rate remains high. According to the Pakistan Bureau of Statistics (PBS), the inflation reading surged by 43.16% compared to the same week last year.
The reduction in SPI on a week-on-week basis was primarily driven by a 12.18% decrease in potato prices and a 5.18% drop in tomato prices. Notable reductions were also seen in the prices of Lipton tea (2.57%), chicken (1.19%), rice basmati broken (0.52%), mustard oil (0.36%), garlic (0.33%), and 2.5 Kg vegetable ghee (0.31%).
Conversely, significant increases were observed in the prices of sugar (6.02%), pulse gram (2.57%), eggs (2.33%), rice irri -6/9 (1.54%), pulse moong (1.23%), georgette (1.16%), onion (1.05%), cooked beef (0.76%), pulse masoor (0.69%), shirting (0.43%), long cloth (0.20%), and the price of LPG gas (0.16%) during the week.
Out of 51 items, prices of
19 (37.26%) increased, 10 (19.60%) decreased, and 22 (43.14%) remained unchanged during the week.
Read Weekly inflation reverses trend with 1.16% rise
On a year-on-year basis, the SPI inflation reading surged by 43.16%, with the major rise attributed to a staggering 1108.59% increase in gas charges for Q1 compared to the same week last year. Other significant contributors to the rise include cigarette prices (93.22%), chilies powder (81.74%), wheat flour (81.40%), garlic (71.17%), rice basmati broken (64.30%), rice irri-6/9 (60.64%), gents sponge chappal (58.05%), gents sandal (53.37%), sugar (50.52%), gur (50.42%), and the price of pulse mash (44.80%).
The central bank expressed concern over the substantial rise in gas prices in November, which pushed the inflation reading beyond the bank’s projection to 29.2%. Although the bank projected an average monthly inflation reading of 20-22% for FY24 in July 2023, it hinted in December 2023 that the actual figures might surpass this projection. The bank expects inflation to remain elevated in December 2023 and January 2024 due to the gas price hike and anticipates revising its projections in January 2024 during the next monetary policy statement.
In its December monetary policy statement, the bank refrained from providing the CPI inflation reading for FY24, emphasising that it reviews the figures biannually in July and January. Despite the current challenges, the bank remains optimistic that inflation will decelerate to the targeted level of 5-7% in FY25.
Published in The Express Tribune, December 16th, 2023.
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