Weekly inflation slows down
Experts have highlighted two major reasons for Pakistan’s record-high inflation reading of 36.4% in April: the sharp devaluation of the Pakistani rupee against the US dollar and the global rise in commodity prices. Photo: file
The sensitive price indicator (SPI) reveals a 0.51% decrease in weekly inflation for the week ending December 21, marking the second consecutive weekly downtick. Notably, the drop is attributed to reduced petrol and potato prices, although the overall inflation reading remains elevated.
The Pakistan Bureau of Statistics (PBS) reported a 42.60% surge in weekly inflation, primarily due to the significant increase in gas prices compared to the same week in the previous year.
According to Maaz Azam, an analyst at Optimus Capital Management, the week-on-week decline is attributed to the reduction in the prices of petrol super and potatoes, contributing to a negative 0.4 percentage points and negative 0.19 percentage points, respectively, resulting in a weekly inflation decrease of 0.51%.
PBS data indicates a 13.17% decrease in potato prices during the week, while petrol super prices dropped by 4.97%. Other notable reductions include diesel (4.68%), tomatoes (3.45%), sugar (1.16%), wheat flour bag (0.33%), chicken (0.13%), rice basmati broken (0.11%), and the price of cooking oil (5 litres) down by 0.07%.
Conversely, significant increases were observed in the prices of eggs (10.42%), firewood whole (1.23%), onions (1.19%), pulse moong (0.88%), pulse gram (0.79%), garlic, rice irri-6/9 (0.40% each), pulse masoor (0.30%), LPG (0.26%), bananas (0.19%), shirting (0.15%), and the price of georgette (0.13%).
Read Weekly inflation reverses trend with 1.16% rise
Out of 51 items, prices of 18 increased (35.29%), 9 decreased (17.65%), and 24 remained unchanged (47.06%) during the week.
On a year-on-year basis, the inflation reading surged by 42.60%, primarily due to a 1108.59% increase in gas charges for Q1 compared to the same week in the previous year.
Financial experts anticipate the benchmark monthly inflation reading, measured by the consumer price index (CPI), to remain elevated in December 2023, reaching around 30%, mainly due to the significant gas price hike implemented by the government in November 2023. The CPI reading rose to 29.2% in November compared to the 10-month low of 26.9% in October.
The central bank is expected to revise its average monthly inflation reading for the current fiscal year in January 2024, against its initial forecast of 20-22% for FY24 made in July 2023. The bank had projected a deceleration in the reading to 5-7% in FY25 after recording CPI inflation at 19% in FY23.
Published in The Express Tribune, December 23rd, 2023.
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