Weekly inflation, measured through the Sensitive Price Indicator (SPI), reached an eight-month high at 44.64% in the week ended Thursday, driven by the increased prices of energy and food products compared to the same week last year. The Pakistan Bureau of Statistics reported a 0.34% uptick in SPI for the week, highlighting its resilience despite the State Bank of Pakistan maintaining a robust 22% interest rate since June 2023.
The SPI, consisting of 51 essential items from 50 markets across 17 cities, showcased alarming increases in various commodities. Gas charges for Q1 skyrocketed by 1108.59% to Rs1,711 per unit (million British thermal unit/mmbtu), while tomatoes became 183.16% more expensive at Rs153.38 per kilogram. Cigarettes (Capstan) surged by 93.22%, reaching Rs221.80, and Chilies Powder (National 200-gram packet) experienced an 81.74% hike to Rs400. Wheat Flour (20kg bag) saw a 65.03% increase, reaching Rs2,811.833 for the week compared to the same period last year.
Read Inflation hits seven-week high
Additional goods, including garlic, gents sponge chappal, sugar, gents sandal, rice irri-6/9, gur, and eggs, witnessed price hikes in the range of 47-60%. Among the 51 items, 43.14% (22 items) experienced price increases, 15.68% (8 items) saw decreases, and 41.18% (21 items) remained unchanged compared to the previous week.
Despite the persistently high interest rate implemented by the SBP to discourage non-essential purchases, administrative measures, such as government-approved increases in gas prices, have offset the impact, significantly contributing to the inflation surge in the country.
The benchmark monthly inflation reading, measured through the Consumer Price Index (CPI), reached a three-month high at 29.9% in December 2023. Government estimates suggest that inflation may remain elevated in January and February. However, a subsequent deceleration is anticipated, potentially allowing the central bank to reduce the interest rate, fostering moderate economic activities in FY24.
Published in The Express Tribune, January 20th, 2024.
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