Weekly inflation at new 7-month low

SPI-based inflation rate slows to 26.94% in week ended April 25

KARACHI:

The short-term inflation reading further decelerated by 1.10% in the week ended April 25, 2024 in the backdrop of a fall in prices of food items including tomato, onion and chicken, maintaining its downward streak for the second consecutive week.

According to the Pakistan Bureau of Statistics (PBS) and local research houses, the Sensitive Price Indicator (SPI) – a weekly inflation gauge – slowed down to a new seven-month low at 26.94% in the latest week compared to the corresponding week of last year.

However, the inflation rate still remained elevated as reflected in the double-digit level.

SPI is computed every week to assess price movements of essential commodities at a short interval and their impact on consumers. SPI comprises 51 essential items for which data is gathered from 50 markets in 17 cities of the country.

During the week under review, out of the 51 commodities covered by the SPI, prices of 15 (29.41%) items increased, 10 (19.61%) items decreased and 26 (50.98%) items remained unchanged compared to the previous week. The slowdown in inflation was primarily led by the decreasing prices of tomatoes, which became cheaper by 20.83% to Rs92.56 per kg in the week ended April 25 compared to Rs116.92/kg last week.

It was followed by onion prices, which fell by 14.43% to Rs169.90/kg compared to Rs198.54/kg in the previous week. Chicken prices dipped by 11.64% to Rs456.24/kg compared to Rs516.32/kg a week earlier.

Prices of other essential commodities decreased up to 5%, which included wheat flour, eggs, chilli powder, bananas, liquefied petroleum gas (LPG) and garlic.

However, prices of some other commodities increased up to 1.80% on a week-on-week basis including potato, milk powder, vegetable ghee, mash pulse, sugar, gur, cooked pulse, mutton and shirting.

The year-on-year SPI trend depicted an increase of 26.94% with gas charges for Q1 rising by 570% in the week under review compared to the same week of last year. It was followed by tomatoes becoming expensive by 122.34% and onions becoming costlier by 121.31%.

Prices of other commodities surged up to 76.53%, which were chilli powder, gents’ sandal, garlic, gents’ sponge chappal, salt powder, shirting, gur, mash pulse and beef.

Research house Optimus Capital Management anticipated that the benchmark monthly inflation, measured through the Consumer Price Index, would contract by 3.6 percentage points to 17% in April 2024.

“A noticeable drop in the food index (down 2.6% month-on-month) and electricity prices (lower by 9.5% MoM), combined with a favourable base effect, is expected to significantly slash the headline inflation by 3.6 percentage points…to 17% year-on-year,” it said.

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

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