Inflation slows to 26-month low
Experts have highlighted two major reasons for Pakistan’s record-high inflation reading of 36.4% in April: the sharp devaluation of the Pakistani rupee against the US dollar and the global rise in commodity prices. Photo: file
Pakistan’s weekly inflation reading, measured through the Sensitive Price Indicator (SPI), accelerated 0.17% because of a hike in food prices in the week ended July 25, 2024, maintaining its uptrend for the fourth consecutive week and ahead of the central bank’s monetary policy committee meeting on July 29.
According to the data released by Pakistan Bureau of Statistics (PBS), the weekly inflation rate surged 20.09% when compared with the same week of last year.
The year-on-year trend, however, indicated a marked slowdown in inflation to almost 26-month low compared to nearly 44% inflation in late January 2024, according to Arif Habib Limited.
The uptrend in the week-on-week inflation for the fourth week in a row may force the State Bank of Pakistan (SBP) to leave its policy rate unchanged at 20.5%. Financial experts remain divided whether the central bank will make the second successive reduction in the policy rate early next week or will keep it on hold for the time being.
The medium to long-term outlook suggests the bank will cut the key policy rate by a total of 5-6 percentage points in the current fiscal year, which will end on June 30, 2025, amid a significant drop in the benchmark monthly inflation reading, called the Consumer Price Index (CPI), to a two-and-a-half-year low of 11.8% in May 2024 compared to a multi-decade high of 38% in May 2023. It, however, surged again to 12.6% in June 2024.
Latest projections signal the inflation rate will remain in the range of 12-13% in FY25 compared to over 23% in FY24.
The rise in the week-on-week inflation was led by the price of chicken (farm broiler live), which increased 4.80% to Rs431.28 per kg in the week under review compared to Rs411.54/kg in the prior week.
Garlic got expensive by 2.01% to Rs494.05/kg compared to Rs484.33/kg last week.
Gram pulse rose 1.87% to Rs338.92/kg compared to Rs332.70/kg a week earlier. Eggs got dearer by 1.71% to Rs257.12/dozen compared to Rs252.80/dozen.
Beef (average quality with bone) rose 0.93% to Rs974.84/kg in the week ended July 25, 2024 compared to Rs965.83/kg in the previous week.
Prices of other essential commodities increased up to 0.89% week on week, which included gur, moong pulse, fresh milk, firewood and cigarettes.
The SPI comprises 51 essential items whose data and price trends are observed in 50 markets across 17 cities in the country.
During the week under review, out of the 51 items, prices of 19 (37.25%) items increased, rates of eight (15.69%) items decreased and prices of 24 (47.06%) items remained unchanged compared to the previous week.
The year-on-year trend depicted an increase of 20.09% in the SPI reading as gas charges for Q1 soared 570% compared to the same week of last year.