Weekly inflation edges down 0.62%

SPI reading slows down for third consecutive week

KARACHI:

Pakistan's weekly inflation gauge, measured through the Sensitive Price Indicator (SPI), dipped by 0.62% week-on-week, driven by easing food prices and continuing to slow down for the third consecutive week.

According to the Pakistan Bureau of Statistics' (PBS) data, the pace of inflation slowed down to a new 27-month low at 15.34% in the week ended August 29, 2024, when compared with the same week of last year.

The reading still remains elevated in double digits but it is likely to enter into single digit on the back of central bank's tight monetary policy, which plays a crucial role in controlling price hike.

The downward trend in short-term inflation builds expectations that the benchmark monthly inflation, measured through the Consumer Price Index (CPI), will come down to 9.8% in August 2024.

Already, the CPI has touched a three-year low at 11.1% in July compared to the multi-decade high of 38% in May 2023.

The easing inflation will prompt the SBP to make a third consecutive reduction in its policy rate in the range of 1 to 1.5 percentage points.

SPI comprises 51 essential commodities whose price data is collected by the PBS from 50 markets across 17 cities. During the week ended August 29, 2024, prices of 17 items increased, rates of 10 items decreased and prices of 24 items remained unchanged.

The 0.62% fall in WoW inflation was led by live chicken price which fell by 3.02% to Rs432.81 per kg, followed by bananas, 2.35% to Rs138.20/dozen,chilli powder dropped 1.42% to Rs324.23/pouch and wheat flour cost 0.85% less at Rs1,784.69/20kg.

The YoY increase of 15.34% in SPI was mainly fueled by Q1 gas charges, which rose 570%, followed by onions, which got expensive by 95.16%.