SPI rises 0.80%, highest since July

Chicken, tomato, cooking essentials drive spike in inflation

KARACHI:

The Sensitive Price Indicator (SPI) for the week ended December 26, 2024 recorded an increase of 0.80%, marking the highest week-on-week inflation since July 4, 2024.

The inflation was primarily driven by a significant rise in prices of essential items. SPI for the week ended December 26 recorded a year-on-year increase of 5.08%.

"SPI marked the highest week-on-week inflation since July 4, 2024," Arif Habib Limited (AHL) Director of Equities Tahir Abbas said.

Chicken prices surged by 22.47% to Rs409.22/kg, while tomato prices recorded a sharp increase of 20.75% to Rs255.27/kg.

Other notable increases were observed in sugar, which rose 2.19% to Rs137.33/kg, vegetable ghee (1kg) 1.17% to Rs574.51/pouch, firewood 0.95% to Rs1,301.12/40kg due to cold weather, vegetable ghee (2.5kg) 0.91% to Rs1,465.14/tin, cooking oil (5 litres) 0.74%, cooked beef and mustard oil 0.69% each, liquefied petroleum gas (LPG) 0.18%, and washing soap 0.09%.

Conversely, a decline was recorded in prices of several items, including onions 8.13% to Rs129.13/kg, potatoes 2.38% to Rs113.08/kg, mash pulse 1.28% to Rs500.26/kg, gram pulse 0.78% to Rs373.79/kg, bananas 0.68% to Rs119.05/dozen, Irri-6/9 rice 0.50%, eggs 0.30% and broken Basmati rice 0.15%.

Out of the 51 essential items tracked during the week, prices of 17 items increased, 10 items decreased, while 24 items remained stable.

On a year-on-year basis, the SPI increased by 5.08%. Significant annual increases were observed in tomatoes, which rose by 138.53%, ladies' sandals 75.09%, potatoes 61.17%, gram pulse 51.17%, moong pulse 31.51%, powdered milk 25.62%, beef 24.28%, garlic 17.27%, gas charges for Q1 15.52%, cooked daal 15.10%, shirting 14.36% and firewood 13.14%.

JS Global Deputy Research Head Muhammad Waqas Ghani noted that although SPI increased in the week ended December 26, the overall sharp disinflationary trend was likely to continue.

He projected that December's Consumer Price Index (CPI) may drop to 4%, the lowest since April 2018, primarily due to a high base effect.

Month-on-month inflation is expected to remain flat. Average inflation for the first half of FY25 is projected at 7.3%, a significant drop from 28.8% recorded in the first half of FY24.

Food inflation, which exceeded 27% in the previous year, is expected to rise marginally by 0.03% year-on-year in December, with a 23-basis-point month-on-month decline.

Core inflation is anticipated to reach 10.8% year-on-year in December, with an 80-basis-point month-on-month increase. Projections for FY25 suggest average CPI inflation may settle at 6.5%.