SPI records lowest rise in seven years

Big fall in prices of food items restricts increase in short-term inflation

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Pakistan's weekly Sensitive Price Indicator (SPI) dropped 0.77% week-on-week for the period ended January 23, 2025, marking its fourth consecutive decline.

The decrease was largely driven by significant price drops for essential items, including tomatoes (-33%), eggs (-10%), onions (-10%) and potatoes (-7%).

On a year-on-year basis, the SPI recorded a modest increase of 0.5%, the lowest in nearly seven years, signalling the cooling of inflationary pressures, according to Topline Research.

"SPI reading is the lowest since the data is available," remarked AHL Director Research Tahir Abbas.

According to the Pakistan Bureau of Statistics (PBS), a significant week-on-week decrease was observed in prices of tomatoes (-32.99%), eggs (-10.23%), onions (-9.79%), potatoes (-7.37%), liquefied petroleum gas (LPG, -2.70%), pulse gram (-1.61%), chicken (-1%), pulse mash (-0.76%) and gur (-0.50%).

On the other hand, prices of several items recorded an increase, including sugar (2.93%), bananas (2.70%), garlic (0.60%), broken Basmati rice (0.47%), one-kg vegetable ghee (0.33%), pulse moong (0.25%), cooked daal (0.21%), Irri-6/9 rice (0.15%) and firewood (0.13%).

On a year-on-year basis, the SPI showed an overall increase of 0.52%. Notable price hikes were seen in ladies' sandals (75.09%), potatoes (44.30%), pulse gram (37.98%), pulse moong (32.67%), powdered milk (25.89%), beef (22.37%), one-kg vegetable ghee (16.87%), garlic (16.28%), Q1 gas charges (15.52%), shirting (14.83%), 2.5kg vegetable ghee (14.54%) and firewood (0.13%). Meanwhile, significant price reductions were recorded for onions (-51.59%), eggs (-39.15%), tomatoes (-37.43%), wheat flour (-36.29%), chilli powder (-20%), Q1 electricity charges (-18.11%), pulse masoor (-11.01%), pulse mash (-10.27%), broken Basmati rice (-8.56%), diesel (-5.47%), LPG (-1.79%) and petrol (-1.18%).

JS Global deputy research head said the ongoing sharp disinflationary trend was expected to persist, with January Consumer Price Index (CPI) likely to fall to 2.8%, the lowest since November 2015, owing to a high base effect, despite a 0.6% month-on-month uptick. This will take 7MFY25 average inflation to 6.7%, down from 7MFY24 average of 28.7%.