Rising prices of petrol, chicken drive weekly inflation higher

KARACHI: Weekly inflation surged by 0.51 percent week-on-week and 47.23 percent year-on-year during the period ended April 19, driven by higher prices of petrol and chicken, resulting in increased financial strain for lower and middle-income groups.

Petrol prices jumped almost four percent during the week to stand at Rs282.90/litre from Rs272.89/litre in the last week. Government increased Rs10/litre on the fuel to pass on the impact of the increase in international price of the crude oil.

Pakistan Bureau of Statistics (PBS) in its data issued on Friday attributed the increase in sensitive price indicator (SPI) to the rise in prices of LPG (4.75 percent), potatoes (3.79 percent), petrol (3.67 percent), tea (3.61 percent), gur (3.40 percent), matchbox (2.51 percent), bread (2.48 percent), chicken (2.00 percent), bananas (1.68 percent), broken basmati rice (1.54 percent) and rice irri-6/9 (1.22 percent).

On the other hand major decrease was observed in the prices of tomatoes (13.11 percent), onions (4.62 percent), garlic (3.59 percent), sugar (1.52 percent), wheat flour (0.93 percent), mustard oil (0.56 percent), cigarettes (0.26 percent) and pulse gram (0.22 percent).

For the week under review, SPI was recorded at 251.83 points against 250.56 points registered last week and 171.05 points recorded during the week ended April 21, 2022.

Fahad Rauf, head of research at Ismail Iqbal Securities said that SPI experienced an increase, mainly driven by 4 percent and 2 percent increase in the prices of petrol and chicken, respectively.

During the week, the government passed on the impact of rising international oil prices and rupee devaluation by raising petrol prices by Rs10/litre, bringing the new price to Rs282/litre. On the other hand, chicken prices have risen mainly due to increased seasonal demand in Ramazan and arrival of Eid.

“We expect April 2023 CPI (consumer price index) to come around 39 percent vs 35.4 percent in March 2023, where the month-on-month increase is mainly expected from house rent revision and wheat prices,” Rauf added.

Prices of commodities have risen significantly over the last year on account of devaluation as well as the massive floods that devastated food crops across most of the fertile plains of the country.

Different weightages are assigned to various commodities in the SPI basket. Commodities with the highest weights for the lowest quintile include milk (17.5449 percent), electricity (8.3627 percent), wheat flour (6.1372 percent), sugar (5.1148 percent), firewood (5.0183 percent), long cloth (4.2221 percent), and vegetable ghee (3.2833 percent).

Of these commodities, the price of milk increased; wheat flour and sugar decreased; whereas prices of electricity, firewood, long cloth and vegetable ghee remained unchanged. However, the prices of all these commodities went up on YoY basis.

PBS compiles SPI via collecting prices of 51 essential items from 50 markets in 17 cities of the country. During the week, out of 51 items, prices of 29 (56.86 percent) items increased, 8 (15.69 percent) items decreased and prices of 14 (27.45 percent) items remained unchanged.

The PBS data attributed the YoY rise in SPI to the jump in the prices of cigarettes (151.45 percent), wheat flour (143.88 percent), gas charges for Q1 (108.38 percent), tea (104.28 percent), diesel (102.84 percent), potatoes (98.74 percent), bananas (98.42 percent), eggs (97.80 percent), petrol (87.81 percent), broken basmati rice (87.30 percent), rice irri-6/9 (83.52 percent), pulse moong (68.94 percent), plain bread (59.22 percent), and pulse mash (58.35 percent).

Decrease was observed in the prices of tomatoes (8.65 percent) and chili powder (6.48 percent). 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 43.57, 46.79, 46.69, 46.89, and 48.69 percent respectively.