Weekly inflation unchanged as cost of tomatoes tumbles

KARACHI: After easing slightly last week, Pakistan’s weekly inflation closed flat during the seven-day period ended December 8, but the annualised number remained close to 31 percent, continuing to hurt everyone.

According to the Pakistan Bureau of Statistics (PBS) data, the year-on-year increase in the sensitive price indicator (SPI) was mainly because of increase in prices of onions (4222.57 percent), diesel (64.57 percent), tea (62.61 percent), powdered salt (57.35 percent), eggs (55.28 percent), petrol (53.85 percent), gents sponge chappal (52.21 percent), bananas (50.58 percent), tomatoes (49.04 percent), pulse gram (48.06 percent), pulse moong (45.44 percent), mustard oil (42.96 percent) and pulse mash (39.98 percent).

A decrease was recorded in the prices of chilli powder (40.90 percent), gur (4.76 percent) and electricity for Q1 (2.67 percent).

Fahad Rauf, head of research at Ismail Iqbal Securities, in his note said the SPI came in unchanged as sharp fall in tomato prices (down 25 percent WoW) cancelled out the impact of increase in onion prices (up 8.8 percent WoW). Tomatoes have lost most of the gains made post-flood.

“Major reason behind fall in tomato prices is the arrival of new crop from Sindh. On the other hand, onion prices have remained on the high side owning to increase in duty on onion exports by the Afghanistan government,” he noted. “We expect perishable prices to decline further in December 2022 due to seasonality. We estimate December 2022 CPI (consumer price index) at 24.1 percent vs 23.8 percent in November 2022.”

Apart from higher export duties put on onions in Afghanistan, Pakistani importers of perishable commodities have been facing a fair share of struggles in getting their cargoes cleared from the ports in Karachi.

Around $5.5 million worth of onion, garlic and ginger cargoes have been stuck as per the All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association (PFVA). Of these 250 are onion containers worth $2.107 million, 63 ginger containers priced $0.816 million and 104 garlic containers valued around $2.533 million are included. Though ginger is not part of the SPI basket, onion and garlic are, and the impact of this delay might be visible in the PBS numbers next Friday. Devastating floods and slow rehabilitation of the affected lands have triggered demand to import perishables. However, amidst Pakistan’s dollar woes going up speedily and that too on the verge of a default, banks too do not have much of a choice.

Cargoes of poultry feed measuring 600,000 tonnes also remain stuck at the port due to the lingering issue of genetically modified soybean, which under the country’s import rules is not allowed. Flouting such instructions, the consignments were nevertheless put on freight and now have resulted in a tussle between the Department of Plant Protection and feed importers.

To a query if the impact would be visible in SPI soon, Fahad Rauf said, “Eggs have already shot up. Chicken will also come under pressure if the situation persists.”

PBS compiles SPI via collecting prices of 51 essential items from 50 markets in 17 cities of the country. During the week, despite unchanged WoW SPI, PBS data showed that out of 51 items, prices of 24 (47.06 percent) items increased, 8 (15.69 percent) items decreased and prices of 19 (37.25 percent) items remained stable.

Although number-wise, WoW inflation has lost steam, low and middle income Pakistanis have been suffering significantly because of the burden of high prices of essentials for months, which coupled with stagnant or no wages, economic and political instability, and currency devaluation has made things worse.