Weekly inflation rises 0.45%

SPI increases for second week in a row, driven by high food prices

KARACHI:

The weekly inflation, measured by the Sensitive Price Indicator (SPI), increased 0.45% in the week ended June 6, 2024 on the back of rising food prices ahead of Eidul Azha, maintaining its uptrend for the second successive week.

The continuous price hike for essential commodities provides a solid ground for the State Bank of Pakistan (SBP) to ignore growing calls to make the first cut in months in its benchmark interest rate in the upcoming monetary policy meeting scheduled for Monday (June 10).

To allay market concerns, it may resort to a lower-than-expected rate cut and maintain a tight monetary policy in line with the recommendation of the International Monetary Fund (IMF) with which Pakistan is engaged in negotiations for a new loan package of around $8 billion.

Earlier, a sharp deceleration in the monthly inflation, measured by the Consumer Price Index (CPI), to a two-and-a-half-year low at 11.8% had instilled hopes that the central bank would slash the rate up to 200 basis point to 20% from the record high of 22%.

According to the Pakistan Bureau of Statistics (PBS), the short-term inflation surged 21.69% in the week ended June 6, 2024 compared to the same week of last year.

The SPI comprises 51 essential items whose data is gathered from 50 markets across 17 cities in the country.

During the week under review, out of the 51 items, prices of 19 (37.26%) items increased, rates of 14 (27.45%) items decreased while prices of 18 (35.29%) items remained unchanged at the previous week’s levels.

The rise in the week-on-week inflation was led by onion prices, which increased 33.21% to Rs133.93 per kg compared to Rs100.54/kg in the previous week. It was followed by tomatoes, which became expensive by 15.34% to Rs75.62/kg compared to Rs65.56/kg last week.

Banana price rose 4.93% to Rs254.46/dozen compared to Rs147.20/dozen earlier. Gram pulse cost 3.69% more at Rs274.12/kg compared to Rs264.37/kg in the previous week.

The price of potatoes went up 2.62% to Rs92.32/kg compared to Rs89.96/kg in the prior week.

Other essential commodities saw price increase up to 1.84% including chicken, georgette, gur, mash pulse, lawn, cigarettes and energy savers.

Published in The Express Tribune, June 8^th, 2024.

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