Short-term inflation eases 0.08%

The inflation reading measured by the Sensitive Price Indicator (SPI) ticked down 0.08% following a reduction in food prices in the week ended October 11, 2024 compared to the previous week.

The deceleration was in contrast to the uptrend recorded in the prior two consecutive weeks.

When compared with the corresponding week of last year, the short-term SPI-based inflation surged 12.74%, according to data released by the Pakistan Bureau of Statistics (PBS) on Friday. The persistent double- digit year-on-year inflation suggests that there is a big room for further slowdown in the coming weeks and months.

PBS reported that the 0.08% easing of week-on-week inflation was led by tomatoes, which dropped 19.79% to Rs117.55 per kg in the week ended October 11 compared to Rs146.56/kg in the previous week.

It was followed by bananas, which cost 2.91% less at Rs123.23/dozen compared to Rs126.92/dozen in the prior week.

The price of refined sugar ticked down 1.47% to Rs135.49/kg compared to Rs137.51/kg in the preceding week. Similarly, mash pulse decreased 1.16% to Rs547.51/kg compared to Rs553.92/kg a week ago.

The price of chicken (live broiler) dropped 0.84% to Rs462.66/kg against Rs466.60/kg in the previous week. Rates of other essential commodities dipped up to 0.42% including moong pulse, eggs and masoor pulse.

However, prices of many other kitchen items rose up to 4.14% week-on-week, which included onion, wheat flour, gram pulse, mustard oil, potatoes, liquefied petroleum gas (LPG), gur, cooking oil, vegetable gee, firewood and cigarettes.

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

During the week under review, prices of 15 (29.42%) items increased, rates of eight (15.68%) items decreased and prices of 28 (54.90%) items remained unchanged compared to the previous week.

The year-on-year spike of 12.74% in short-term inflation was driven by Q1 gas charges, which surged 570% compared to the same week of last year. It was followed by gram pulse, which became costlier by 71.08%.

Onion price rose 49%, chicken surged 25.97%, milk powder 25.36% and beef 24.62%. Other essential commodities got dearer by up to 20% including moong pulse, cooked daal, georgette and ladies' sandal.

Earlier, the benchmark monthly Consumer Price Index (CPI)-based inflation touched more than three-and-a-half-year low at 6.9% in September 2024 compared to the multi-decade high of 38% reached in May last year.

The deceleration encouraged the central bank to slash its key policy rate by a total of 4.5 percentage points to 17.5%, which results in provision of low-cost loans to businesses to support economic growth. Market speculation suggests the bank may further cut the rate by 1.5-2 percentage points in its monetary policy meeting in November.