Weekly inflation hits six-year low at 4.16%

Pakistan's weekly inflation rate has surprisingly plunged to 4.16% year-on-year, marking its lowest level in six years, primarily due to significant declines in staple food and energy prices, according to the Pakistan Bureau of Statistics (PBS). Prices of wheat flour, petrol, and diesel played a critical role in pulling down the Sensitive Price Indicator (SPI) for the week ending November 14, 2024.

On a week-on-week basis, however, short-term inflation edged up by 0.55%, continuing an upward trend for the third consecutive week.

Muhammad Sohail, CEO of Topline Securities, commented that the 4.16% SPI reading was last observed in October 2018. The decline was attributed to price reductions in key commodities: wheat flour dropped by 34.98% to Rs1,837.25 per 20kg bag, diesel by 13.92% to Rs256.32 per litre, and petrol by 11.64% to Rs249.56 per litre, compared to the same week last year.

However, PBS data also showed significant price hikes for essential items. For instance, prices surged by up to 74.53% year-on-year for pulse gram, pulse moong, powdered milk, beef, onions, garlic, cooked daal, mutton, and firewood.

Optimus Capital Management, Head of Research, Maaz Azam pointed out discrepancies in PBS's SPI calculations. He noted that electricity price changes have not been fully reflected in the index. The government had provided a three-month electricity subsidy (July-September 2024) for consumers using up to 200 units. However, PBS has yet to reverse this adjustment in its calculations.

Azam explained that electricity charges for Q1 should have risen to Rs7.8/kWh, as per SPI data published on October 3, 2024. This delay has led to inaccuracies in the SPI and the National Consumer Price Index (NCPI).