SPI rises 0.10% week-on-week

Pakistan's weekly inflation reading, measured through the Sensitive Price Indicator (SPI), rose 0.10% in the week ended October 31, 2024, mainly due to a spike in food prices.

According to the Pakistan Bureau of Statistics (PBS) data, the latest uptick in inflation came in sharp contrast to a decline of 0.22% in the previous week.

The short-term inflation surged 14.45% when compared with the same week of last year. However, the year-on-year inflation was lower than the reading of 15.15% recorded in the previous week.

Food inflation has been gradually returning to higher levels over the past few weeks, which may prompt the central bank to avoid a significant reduction in policy rate on Monday.

Financial markets expect a reduction of approximately 200 basis points in the upcoming monetary policy announcement.

The rise in weekly inflation coincided with the increase in the benchmark monthly inflation, measured by the Consumer Price Index, which reached 7.2% in October. The expected rate was 6.5% for the month and it was also higher than the 6.9% inflation registered in September 2024. While some market experts see room for a reduction of 100 to 300 basis points in the policy rate, the higher inflation may restrict the central bank from making a steeper cut.

The week-on-week increase of 0.10% in the SPI reading was led by the prices of eggs, which rose 3.40% to Rs317.90 per dozen compared to Rs307.44/dozen in the previous week. It was followed by garlic, which got costlier by 2.95% at Rs612.74/kg compared to Rs595.18/kg a week earlier.

Similarly, the price of liquefied natural gas (11.65kg cylinder) increased 1.92% to Rs3,219.56 compared to Rs3,158.88. Mustard oil rose 1.49% to Rs522.63/kg compared to Rs514.96/kg while moong pulse went up 1.27% to Rs381.41/kg compared to Rs376.61/kg in the previous week.

Prices of some other essential goods increased up to 1.09% including firewood, vegetable ghee, potato and curd as compared to the prior week. SPI comprises 51 essential items whose price data is collected by the PBS from 50 markets across 17 cities in the country.

Of the total, prices of 12 (23.53%) items increased, rates of 12 (23.53%) items decreased and prices of 27 (52.94%) items remained unchanged compared to last week.