Food prices drive inflation higher

SPI rises 1.11% week-on-week following surge in cost of eatables

KARACHI:

Pakistan’s weekly inflation reading remained high at 1.11% in the week ended March 7, fuelled by a notable surge in food prices ahead of the beginning of Ramazan and maintaining the uptrend for the second successive week.

According to Pakistan Bureau of Statistics’ (PBS) data, the weekly Sensitive Price Indicator (SPI) rose 32.39% on a year-on-year basis compared to the corresponding week of last year.

The inflation indicator went up 1.11% week-on-week, driven by the onion price that spiked 33.86% nationwide to Rs238.30 per kg compared to Rs178.02 in the previous week.

Potato too became highly costlier by 23.81% to Rs69.47 per kg compared to the price of Rs56.11 in the prior week.

Tomato price rose 16.42% to Rs136.59 per kg while banana cost stood 7.12% higher at Rs153.76 per dozen in the week under review compared to Rs143.54 in the previous week, according to the PBS.

Prices of other commodities increased up to 4.43% including liquefied petroleum gas (LPG), eggs, petrol, firewood, beef, mutton, cooked daal and clothes.

Out of the 51 essential commodities covered by the SPI basket, prices of 14 (27.45%) items rose, another 14 (27.45%) items decreased and 23 (45.10%) items remained unchanged compared to the previous week.

On a year-on-year basis, SPI rose 32.39% mainly due to a 570% spike in gas charges for the first quarter. It was followed by tomato becoming expensive by 176.55%. Other commodities became costlier up to 82% on a year-on-year basis including chilli (powder), gents sponge chappal, wheat flour, gents sandal, onion, garlic, gur, sugar and potato.

Inflation may remain on an uptrend in the short run (on a week-on-week basis) ahead of the fasting month of Ramazan, which will begin on March 12 or 13 depending on the sighting of the moon. Also, prices of food items including fruits go up significantly in the first two weeks of the holy month.

Earlier, the benchmark monthly inflation, measured by the Consumer Price index (CPI), decelerated to 23.1% in February compared to 28.3% in the prior month. Forecasts indicate that it will further slow down to 20-21% in March due to a high base effect.

Pakistan’s central bank in late January, however, revised up its inflation forecast to 23-25% for FY24 compared to its previous estimate of 20-22% made in July 2023.

Published in The Express Tribune, March 9^th, 2024.

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