Weekly inflation hits 9-week high

High demand for food items in Ramazan fuels increase in prices

KARACHI:

Pakistan’s inflation reading hit a nine-week high at 1.36% in the week ended March 14, 2024 as energy and food prices rose significantly at the outset of Ramazan, squeezing the purchasing power of ordinary consumers.

According to Pakistan Bureau of Statistics’ (PBS) data, the weekly inflation, measured by the Sensitive Price Indicator (SPI), maintained its uptrend for the fourth consecutive week.

It surged 32.89% in the week ended March 14 as compared to the same week of last year.

The increase in the SPI reading was led primarily by the price of tomato, which surged 21.96% to Rs166.58 per kg in the week under review compared to Rs136.59 per kg in the previous week. The second major boost to inflation came from bananas, which became costlier by 21.76% to Rs187.22 per dozen as opposed to Rs153.76 per dozen in the prior week.

Egg prices shot up by 7.15% to Rs277.11 per dozen compared to Rs258.63 per dozen a week earlier. Onion got costlier by 5.57% to Rs251.58 per kg from Rs238.30 per kg. The price of liquefied petroleum gas (LPG) went up by 4.45% to Rs295.35 per kg compared to Rs282.78 per kg in the past week.Prices of other goods rose up to 4% which included garlic, mutton, beef, chicken, georgette, shirting and long cloth, according to the PBS.

During the week under review, out of the 51 items covered by the SPI basket, prices of 18 (35.29%) items increased, 10 (19.61%) items decreased and 23 (45.10%) items remained unchanged.

Optimus Capital Management, in a short commentary, said the surge in weekly inflation by 1.36% was fueled mainly by electricity charges (which contributed 0.54 percentage point), tomatoes, bananas and onion, which cumulatively contributed 0.56 percentage point.

Meanwhile, the government temporarily suspended exports of onion and banana during Ramazan, until April 15, to stabilise prices in local markets.

A leading exporter said the price of onion, used in almost all dishes, would gradually come down over the next few days as exporters were still purchasing the vegetable. He, however, said bananas were exported in very little quantities and the ban on their export would make no difference in its prices in local markets. The hike in the fruit’s price was largely associated with the production shortfall compared to its demand in the country.

The benchmark monthly inflation reading, measured by the Consumer Price Index, is likely to slow down to 20-21% in March due to a high base effect.

Published in The Express Tribune, March 16^th, 2024.

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