Higher food prices fuel short-term inflation

The Sensitive Price Indicator (SPI) – a short-term inflation gauge – registered a week-on-week increase of 0.38% in the period ended February 27, 2025, fuelled primarily by a notable rise in prices of many essential food items.

Consumers experienced a significant price hike in commodities like tomatoes, which surged 11.49%, bananas (8.32%), eggs (5.43%) and chicken (4.13%). Other items that showed an increase in prices included potatoes (2.79%), onions (2.04%), beef (1.68%), sugar (1.55%) and cigarettes (0.51%).

The rising cost of staples and other commodities is likely to impact household budgets as people grapple with inflationary pressures ahead of Ramazan.

Conversely, the week also saw a decline in rates of several items, which provided some relief to consumers. The price of Lipton tea fell 6.62%, followed by bread (1.67%) and pulse mash (1.12%). Other items that experienced price drops were mustard oil (1.08%) and garlic (1%).

Out of the 51 items monitored, prices of 19 (37.25%) rose, 11 (21.57%) decreased and 21 (41.18%) remained stable. The mixed price movement reflects the varying factors influencing supply and demand.

The year-on-year SPI reading exhibited an increase of 0.32%. It was mainly influenced by the surge in prices of ladies' sandals (75.09%), pulse moong (28.47%) and bananas (27.78%). However, onions and tomatoes recorded a massive decrease of 50.26% and 48.14%, respectively.

The fluctuation in prices of essential goods underscores the challenges faced by consumers and policymakers alike as they navigate the complexities of the current economic landscape. Stakeholders will need to monitor these trends closely to address their implications.

Talking to The Express Tribune, Arif Habib Limited economist Sana Tawfik said prices of perishable items were increasing before the advent of Ramazan. "If we specifically talk about tomatoes, their prices were significantly down, from where they are now increasing in double digits. Likewise, the prices of vegetables and fruits including bananas are also going up," she said.

On a year-on-year basis, inflation was higher in the same period of last year. Though it has increased this year too, its pace is not that significant, she said.