Weekly inflation eases 0.29%

The Sensitive Price Indicator (SPI) for the week ending May 22, 2025, recorded a week-on-week decrease of 0.29%, bringing the SPI index down to 312.34 from 313.24 in the previous week. This decline was largely driven by reductions in the prices of key food and energy items. However, despite this weekly drop, the year-on-year SPI still reflected a modest increase of 1.35%, indicating ongoing inflationary pressure.

This trend follows several weeks of fluctuations, with the SPI having previously dipped as low as -3.5% in late April before rebounding in May. The SPI is calculated weekly to monitor the price movement of essential commodities over shorter intervals, enabling a timely review of the price situation in the country. It tracks a basket of 51 essential items, with data collected from 50 markets across 17 major cities nationwide.

The weekly decline was primarily attributed to significant drops in chicken prices, which fell by 7.26%, followed by decreases in onions (-5.43%), garlic (-2.71%), LPG (-2.44%), potatoes (-0.95%), mustard oil (-0.80%), diesel (-0.78%), pulse masoor (-0.46%), cooking oil (-0.14%), rice IRRI-6/9 (-0.09%), firewood (-0.06%), and both vegetable ghee (-2.5kg) and sugar (-0.05%).

Conversely, upward pressure was noted in prices of tomatoes, which surged by 12.01%, eggs by 8.16%, gur by 1.50%, bananas by 1.00%, pulse moong by 0.79%, wheat flour by 0.63%, pulse gram by 0.39%, powdered milk by 0.36%, rice basmati broken by 0.34%, pulse mash by 0.30%, mutton by 0.26%, energy savers by 0.21%, and beef by 0.12%.

Out of the 51 items monitored, prices of 13 items (25.49%) increased, 14 items (27.45%) declined, while the remaining 24 items (47.06%) remained unchanged during the week.

Year-on-year data showed sharp increases in prices of ladies' sandals (55.62%), chicken (45.12%), pulse moong (30.79%), powdered milk (24.01%), bananas (22.43%), sugar (22.12%), eggs (21.52%), pulse gram (20.70%), beef (17.56%), vegetable ghee 2.5kg (13.86%), LPG (13.05%), and vegetable ghee 1kg (12.76%).

At the same time, the steepest annual declines were observed in onions (-54.93%), potatoes (-30.46%), garlic (-29.43%), electricity charges for Q1 (-29.40%), tea Lipton (-17.93%), wheat flour (-16.63%), pulse mash (-16.03%), tomatoes (-14.03%), chilli powder (-12.30%), rice IRRI-6/9 (-8.50%), pulse masoor (-7.64%), and petrol (-7.43%).

Items such as chicken, garlic, and potatoes have shown consistent weekly declines, contributing to the overall easing in SPI over recent months. However, fluctuating prices of petrol, diesel, and LPG continue to drive volatility in inflation trends.

Periodic depreciation of the rupee against the US dollar has also contributed to higher imported inflation, further complicating the inflation outlook. The State Bank of Pakistan (SBP)'s tight monetary policy stance and administrative price controls on key commodities have so far helped anchor inflation expectations.

Market analysts caution that International Monetary Fund-related measures in the upcoming FY2026 budget—particularly new taxes and adjustments in energy prices—may lead to a renewed spike in inflation. However, a favourable base effect along with improved agricultural output could help ease inflation in the second half of FY2025, provided macroeconomic stability is maintained.