The weekly inflation rate in Pakistan recorded a significant deceleration, reaching an 11-week low at 39.45% in the week ending February 1, 2024. This downturn, measured through the Sensitive Price Indicator (SPI), is attributed to a drop in food prices, counteracting the impact of increased petroleum product prices. Despite this decline, the inflation rate remains elevated, indicating ongoing economic challenges.
According to the Pakistan Bureau of Statistics (PBS), the inflation reading decreased by 0.28% in the reported week compared to the previous week. This marks the second consecutive week of downturn on a week-on-week basis. The inflation rate had sustained above 40% for the preceding 11 consecutive weeks, reaching an eight-month high at 44.60% in the week ending January 18, 2024.
During the week under review, out of 51 items, prices of 12 (23.53%) items increased, 17 (33.33%) items decreased, and 22 (43.14%) items remained unchanged. Notable reductions include an 18.28% decrease in tomato prices to Rs108.32/kg, a 7.77% drop in egg prices to Rs393.31/dozen, and a 6.99% decline in onion prices to Rs209.52/kg. Additionally, the price of an LPG gas (11.67 kg cylinder) dropped by 1.53% to Rs3,341.48/cylinder.
Prices of other commodities experienced cuts in the range of 0.28% to 1.29%, covering items such as Lipton tea, potatoes, pulse masoor, cooking oil, and mustard oil. However, the price of super petrol increased by 5.20% to Rs273.93/litre in the reported week compared to Rs260.39/litre in the previous week.
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Prices of various other items increased by up to 1.88% on a week-on-week basis. These include chicken, diesel, energy saver, bananas, salt powdered, pulse moong, mutton, gur, beef, tea prepared, and georgette, according to the PBS.
The State Bank of Pakistan (SBP) projects that the benchmark monthly inflation reading, measured through the Consumer Price Index (CPI), will experience a significant deceleration starting from March 2024 and onwards. However, the SBP revised its projection for the average monthly inflation reading for the full fiscal year 2024 to be in the range of 23-25%, up from the previous estimate of 20-22%.
The anticipated increase in the average inflation reading is based on the record multi-decade high readings observed in the first half of the fiscal year. The reading slightly decelerated to 28.3% in January 2024 from the three-month high of 29.7% recorded in December 2023. The SBP underscored that the non-energy inflation reading has remained consistent with its July 2023 projection, as the hike in petrol and gas prices necessitated a revision of the full-year forecast.
Published in The Express Tribune, February 3rd, 2024.
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