Inflation spikes to 43.79% YoY

Squeezes consumer purchasing power as energy, food prices soar

KARACHI:

The week ending January 25 witnessed a sharp surge of 43.79% in inflation, as measured by the Sensitive Price Indicator (SPI), compared to the same week last year. The rise, driven by increased energy and food prices, has placed significant strain on the purchasing power of consumers. This persistent inflationary trend is attributed to various factors, including the global surge in commodity prices due to the Covid-19 pandemic first, then geopolitical tensions such as the Russia-Ukraine war and now Israeli aggression on Palestinians. Furthermore, the substantial depreciation of the rupee in recent years has amplified imported inflation in Pakistan.

The Pakistan Bureau of Statistics (PBS) reported a marginal 0.14% decline in the weekly inflation reading for the reviewed week, breaking the upward trend observed in the preceding four weeks. On a year-on-year basis, the inflation surge was primarily led by a staggering 1,108.59% increase in gas charges for Q1, reaching Rs1,711 per unit compared to the same period last year. Other notable increases include a 133.36% rise in tomato prices to Rs132.55/kg, a 93.22% surge in the price of cigarettes (Capstan 20 stick packet) to Rs221.80, and an 81.74% increase in the price of chili powder (National 200 gm packet) to Rs400.

Read Inflation hits 8-month high at 44.64%

Various essential items experienced price hikes ranging from 43% to 63%, including wheat flour, sugar, gentlemen’s sponge chappal, garlic, gentlemen’s sandal, gur, eggs, and rice irri-6/9. During the week, prices of 15 items (29.41%) out of a total of 51 items in the SPI increased, prices of 13 items (25.49%) decreased, and prices of 23 items (45.10%) remained unchanged compared to the previous week.

December marked a three-month high for Pakistan’s benchmark monthly inflation reading, measured through the Consumer Price Index, reaching 29.7%. The government anticipates elevated inflation readings for January and February, projecting a significant deceleration in the remaining four months (March-June) of FY24. This expected slowdown could potentially support the central bank in considering a key policy rate cut to stimulate economic growth in the country.

Published in The Express Tribune, January 27^th, 2024.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.