SPI drops for second straight week

Rises 3.57% YoY; food prices fall on cooling inflation, market sees 200bps rate cut

KARACHI:

The Sensitive Price Indicator (SPI) for the week ending December 5, 2024, decreased by 0.34%, marking the second consecutive decline. This drop is primarily attributed to significant reductions in food prices, particularly tomatoes, which plummeted by 25.15% to Rs139.26/kg, and chicken, which fell by 9.90% to Rs322.14/kg.

Other key items experiencing price reductions include Pulse Mash (-1.67%) to Rs511.08/kg, Pulse Gram (-0.73%) to Rs385.04/kg, wheat flour (-0.71%) to Rs1,821.84/20kg, Pulse Masoor (-0.46%) to Rs300.20/kg, rice varieties such as Basmati Broken and IRRI-6/9 (-0.37%) to Rs204.40/kg and Rs161.05/kg respectively, and LPG (-0.19%) to Rs3,437.52 per 11.67kg cylinder.

Conversely, several items saw price increases during the same period. Garlic prices rose by 1.83%, while vegetable ghee (2.5 kg) and potatoes increased by 1.72% and 1.69%, respectively. Other notable increases included petrol (+1.48%), sugar (+1.33%), diesel (+1.27%), onions (+1.10%), and vegetable ghee (1 kg) (+1.07%). Cooking oil (5 litres) also saw an increase of 0.99%, while bananas, firewood, and cigarettes experienced modest rises of 0.48%, 0.14%, and 0.09%, respectively.

"The price situation is improving, mainly in the food category, which has decreased by 2% year-on-year and month-on-month based on CPI numbers," said Waqas Ghani Kukaswadia of JS Global. He stressed that consistent policy is key to improving inflation and strengthening the economy.

Of the 51 items monitored in the SPI basket, 18 items (35.29%) recorded price increases, 10 items (19.61%) saw price declines, and 23 items (45.10%) remained stable. This reflects a diverse pattern of price movements across different sectors of the economy, with a significant portion of items maintaining price stability.

Year-on-year (YoY) data indicates an overall SPI increase of 3.57%. Items showing the largest YoY price hikes include ladies' sandals (+75.09%), Pulse Gram (+65.64%), and Pulse Moong (+37.83%). Other notable increases were recorded in powdered milk (+25.74%), beef (+23.77%), tomatoes (+17.93%), garlic (+17.44%), and potatoes (+17.31%). Gas charges for the first quarter rose by 15.52%, while shirting and cooked dal increased by 15.03% and 15.02%, respectively.

In contrast, some items experienced significant YoY price decreases. Wheat flour saw a sharp decline of 35.40%, followed by chilies powder (-20.00%), diesel (-10.77%), petrol (-10.33%), and Pulse Masoor (-9.66%). Prices of rice (Basmati Broken) dropped by 7.86%, while tea (Lipton) fell by 7.53%. Chicken prices were down by 7.34%, and electricity charges for Q1 decreased by 6.96%.

The Consumer Price Index (CPI) for November 2024 registered at 4.9%, a significant decline attributed primarily to the favourable base effect. Amid declining inflation, AHL has projected a 200bps rate cut in the monetary policy meeting on December 16.