Decline in power cost keeps weekly inflation stable

KARACHI: Reduction in prices of perishables and lower electricity charges brought weekly inflation down 0.09 percent, though annualised inflation was 29.30 percent during the seven-day period ended December 29 with wheat flour and onion rates sky-high.

Pakistan Bureau of Statistics (PBS) data issued on Friday attributed the WoW decline in sensitive price indicator (SPI) to decrease in the prices of potatoes (8.85%), tomatoes (6.02%), vegetable ghee 2.5kg (1.47%), sugar (1.22%), vegetable ghee 1kg (0.45%), cooking oil 5 litre (0.04%) and non-food item, electricity for q1 (2.44%).

On the other hand major increase was observed in the prices of eggs (2.86%), broken basmati rice and wheat flour (2.81%) each, bread (2.76%), firewood (2.49%), LPG (1.61%), energy saver (1.27%), and bananas (1.18%).

In the midst of the current gas crisis impacting households, rise in the cost of alternate fuels like firewood and LPG has been taking a huge toll on budgets, further aggravated by the rise in the cost of staple foods.

However, the drop in power rates has given only a slight relief to consumers, who have already been struggling amid the economic slowdown, consistently high annualised inflation and joblessness.

Fahad Rauf, head of research at Ismail Iqbal Securities, said SPI decreased mainly due to reduction in electricity charges for Q1 on account of fuel charge adjustment, and continued decline in perishable items. Prices of both tomatoes and potatoes sharply decreased to Rs65/kg and Rs50/kg respectively.

On the other hand, wheat flour prices rose by 2.8 percent week-on-week mainly due to the shortage of wheat and Rs1,000 disparity between support prices of Punjab and Sindh. This is the fifth consecutive week of increase in wheat flour prices. “We estimate December 2022 CPI (consumer price index) at 24.1 percent vs 23.8 percent in November 2022,” he noted.

On year-on-year basis, the price of wheat flour went up 38.52 percent to stand at Rs1,618.80/20kg bag. The essential commodity is back near the all-time high level experienced in September 2022, when the price of a 20kg wheat flour bag was Rs1,621.32/bag. That was when the country was in the midst of the devastating floods.

From last week, the price is up by Rs44.19 on each 20kg wheat flour bag.

PBS data attributes different weightages to the commodities in the SPI basket. For the group with the lowest spending capacity, wheat flour holds a weightage of 6.1372 percent, whereas for the combined group the weightage stands at 3.9725 percent.

Other commodities with the highest weights for the lowest quintile include milk (17.5449 percent), electricity (8.3627 percent), sugar (5.1148 percent), firewood (5.0183 percent), long cloth (4.2221 percent), and vegetable ghee (3.2833 percent).

Among these, prices of milk and firewood increased; electricity, sugar and vegetable ghee declined, whereas the price of long cloth remained the same.

For the groups spending up to Rs17,732; Rs17,733-22,888; Rs22,889-29,517; Rs29,518-44,175; and above Rs44,175; YoY SPI increased 27.80, 28.24, 30.17, 31.35, and 29.61 percent, respectively.

SPI was recorded at 217.20 points against 217.39 points registered last week and 167.98 points recorded during the week ended December 30, 2021.