Weekly inflation up 0.44 percent on runaway flour prices

KARACHI: Surge in wheat flour and onion prices continued to push weekly inflation up 0.44 percent and annualised inflation up 31.75 percent during the seven-day period ended January 12, multiplying the struggles of Pakistani consumers.

Pakistan Bureau of Statistics (PBS) data issued on Friday attributed the WoW increase in sensitive price indicator (SPI) to rise in the prices of wheat flour (6.75%), bread (4.85%), garlic (4.51%), eggs (4.17%), pulse moong (4.11%), broken rice basmati (3.33%), rice irri-6/9 (2.63%), onions (2.44%), pulse gram (2.39%), pulse mash (1.69%), pulse masoor (1.65%), mustard oil (1.56%), LPG (5.24%) and washing soap (1.89%).

On the other hand decrease was observed in the prices of tomatoes (12.30%), potatoes (7.75%), chicken (4.46%), vegetable ghee 1kg (0.29%), cooking oil 5 litre and vegetable ghee 2.5kg (0.11%) each and sugar (0.08%).

Fahad Rauf, head of research at Ismail Iqbal Securities, said SPI increased mainly due to increase in wheat flour and onion prices.

The wheat flour prices have continued to rise despite increase in quota of flour mills by the government. On the other hand, chicken prices have come down by 4.5 percent WoW, due to demand slowdown and release of soybean shipment.

“We estimate January 2023 CPI (consumer price index) at 26.6 percent vs 24.5 percent in December 2022. We have assumed decline in wheat prices, considering government’s recent measures,” Rauf noted.

Wheat flour price has been surging since the week-ended November 24, 2022 when it was Rs1,509.83/bag. Since then, the essential commodity’s average price has risen by Rs302.42/bag.

During the same week last year, the price was Rs1,160.85/20kg bag as per PBS data. This shows that the average price of a wheat flour bag weighing 20kg has increased by Rs651.40 for consumers. On year-on-year basis, this shows a 56.11 percent hike in the price of the essential commodity.

City-wise breakdown of average prices showed that residents of Gujranwala were paying the highest amount for a 20kg wheat flour bag at Rs2,867; followed by Khuzdar at Rs2,856.66; Peshawar Rs2,849.71; Karachi Rs2,845.66; Quetta Rs2,749.99; Hyderabad Rs2,261.34; Bannu Rs2,139.26; Larkana Rs2,116.2; and Sukkur Rs1,658.63. Price of the same bag in Islamabad, Rawalpindi, Sialkot, Lahore, Faisalabad, Sargodha, Multan and Bahawalpur was stable at Rs1,295.

Gujranwala seems to be the only city in Punjab, where the price of a 20kg wheat flour bag is much higher compared to the rest of the province, as well as the federal capital.

For those who depend on the official minimum wage, making ends meet has become impossible.

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; sugar and vegetable ghee declined, whereas the price of electricity and 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 30.85, 31.33, 33.14, 34.13, and 31.67 percent, respectively.

SPI was recorded at 220.53 points against 219.56 points registered last week and 167.39 points recorded during the week ended January 13, 2022.