SPI slips below double digits despite ME war

The Sensitive Price Indicator (SPI) for the week ended July 30, 2026 recorded a year-on-year increase of 9.05%, slipping below the double-digit threshold despite escalating tensions between the United States and Iran in the Middle East and the resultant fluctuations in global crude oil prices.

According to data released by the Pakistan Bureau of Statistics (PBS), the SPI, which monitors 51 essential items from 50 markets in 17 cities, declined 0.91% compared with the previous week that ended on July 23. The combined index stood at 357.61 against 360.88 a week earlier and 327.94 in the corresponding week of 2025.

The year-on-year reading of 9.05% marked some moderation from the 9.66% inflation level recorded in the previous week. The slight easing comes against the backdrop of renewed geopolitical uncertainty in the Middle East, which has kept international crude markets volatile and influenced domestic fuel pricing.

On a week-on-week basis, prices of 27 items (52.94%) rose, six items (11.77%) fell, and 18 items (35.29%) remained unchanged. The sharpest declines were recorded in tomatoes (22.96%), chicken (11.20%) and electricity charges for the lowest consumption quintile (9.06%). Bananas, sugar and pulse moong posted marginal drops.

Major increases were led by onions (7.62%), diesel (4.17%), eggs (3.16%), petrol (2.46%), wheat flour (2%), potatoes (1.93%) and liquefied petroleum gas (LPG; 1.90%). Pulse gram, vegetable ghee, pulse mash, pulse masoor and firewood also edged higher. The rise in petrol and diesel prices reflected the impact of international oil market swings linked to the US-Iran standoff.

On a year-on-year basis, tomatoes remained the biggest contributor to inflationary pressures with a 228.71% surge, followed by onions (95.36%), wheat flour (78.65%), LPG (51.76%), diesel (37.42%) and petrol (23.28%). Mutton, gents' sponge chappal, chilli powder, bananas, beef and plain bread also recorded double-digit annual increases.

In contrast, potato prices declined 30.89% year-on-year, while pulse gram fell 19.89%, chicken 19.56% and sugar 17.48%. Salt powder, pulse masoor, eggs and pulse moong also registered annual declines.

Across expenditure groups, the week-on-week drop was most pronounced for the second quintile at 1.37%, followed by the lowest quintile at 1.19%. The highest income group recorded a milder 0.68% decline. Year-on-year increases ranged between 8.60% and 9.70% across the quintiles, with the combined figure at 9.05%.

The weekly SPI trend over the past 10 weeks shows continued volatility, with the index for the lowest expenditure group moving from 335.56 in late May to 345.63 by the end of July. The latest reading indicates that while short-term relief has appeared in some perishable items, fuel-related costs remain sensitive to geopolitical developments.

The SPI serves as an early indicator of price pressures facing households, particularly those in lower income brackets, as policymakers monitor the interplay between domestic supply conditions and international energy markets.