Short-term inflation rate slows for 5th week

SPI reading drops 1.06% on back of lower food, energy prices

KARACHI:

The week-on-week inflation, measured by the Sensitive Price Indicator (SPI), slowed down 1.06% in the wake of decrease in food and energy prices in the week ended May 16, 2024, maintaining its downward trend for the fifth consecutive week.

According to data compiled by the Pakistan Bureau of Statistics (PBS) and local research houses, the short-term inflation rate decelerated to a 22-month low at 21.22% compared to the corresponding week of last year. It, however, still remained elevated as reflected in its double-digit reading.

The drop in week-on-week inflation was led by tomatoes, which became cheaper by 31.18% to Rs59.21 per kg compared to Rs86.03/kg in the prior week. It was followed by onions as their price dived 21.84% to Rs99/kg from Rs126.67/kg in the previous week.

Garlic price fell 7.76% to Rs552.27/kg compared to Rs598.71/kg while petrol price dropped 5.32% to Rs274.17/litre compared to Rs289.57/litre a week ago.

Wheat flour price decreased 3.66% to Rs1,906.99 per 20kg bag compared to Rs1,979.53 in the prior week.

Prices of other essential commodities fell up to 3.66% which included liquefied petroleum gas (LPG), diesel, Basmati rice (broken), chilli powder, masoor pulse and bananas.

The benchmark monthly inflation rate, measured by the Consumer Price Index, is projected to slow down to over two-year low at 13-13.5% in May from 17.1% in April and a multi-decade high of 38% in May 2023.

The downward trend in inflation makes a strong case for the central bank to cut its key policy rate in June. It has maintained the rate at a record high of 22% for the past 11 months.

Among the commodities which became costlier week-on-week was cooked daal whose price increased 1.96%, followed by shirting which cost 1.74% higher.

Potato price rose 1.46%, beef went up 1.11%, mutton 1.04%, gram pulse 1%, energy savers, long cloth and eggs 0.73% each. The price of cooked beef ticked up 0.50% while chicken rate rose 0.30%.

Published in The Express Tribune, May 18^th, 2024.

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