SPI inflation moderates to 17-week low at 34.96pc YoY

KARACHI: Pakistan’s sensitive price indicator (SPI) went up 0.20 percent week-on-week and 34.96 percent year-on-year during the seven-day period ended June 15, moderating to its lowest level after 17 weeks.

The Pakistan Bureau of Statistics (PBS) attributed the current increase in SPI to increase in food prices, including sugar (4.24 percent), gur (2.42 percent), wheat flour (1.79 percent), curd (1.59 percent), pulse mash (1.25 percent), garlic (1.15 percent), fresh milk (1.08 percent) and non-food item, washing soap (1.61 percent).

On the other hand major decrease was observed in the prices of onions (7.56 percent), bananas (5.00 percent), eggs (4.86 percent), LPG (4.14 percent), pulse moong (2.04 percent), pulse gram (1.46 percent), vegetable ghee 1kg (1.36 percent), chicken (1.12 percent), mustard oil (0.75 percent), cooking oil 5 litre (0.44 percent), pulse masoor (0.42 percent) and vegetable ghee 2.5kg (0.36 percent). Mohammed Sohail, CEO of Topline Securities, said, “Weekly SPI inflation falls to 35 percent YoY, marking the lowest level in the past 17 weeks.”

SPI was up 0.17 percent WoW and 34.83 percent YoY during the week ended February 9, 2023, the PBS data showed. There is a consensus among analysts that inflation has peaked, and was now moderating. This has also prompted the State Bank of Pakistan to pause its policy tightening.

On June 12, the Monetary Policy Com­mittee of the central bank decided to keep the key len­d­ing rate steady, noting sequential ease in inflation expectations. Fahad Rauf, head of research at Ismail Iqbal Securities said that SPI went up mainly due to higher wheat flour and sugar prices.

“Inflation is expected to drop to 30 percent this month vs 38 percent last month due to high base effect,” Rauf added.

For the week under review, SPI was recorded at 255.17 points against 254.67 points registered last week and 189.07 points recorded during the week ended June 16, 2022.

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 19 (37.25 percent) items increased, 12 (23.53 percent) items decreased and prices of 20 (39.22 percent) items remained unchanged.

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

Haseena, a low-income salon worker, shared that making ends meet has become impossible for her. “I cannot pay my daughter’s fee or buy my medicines any more. My budget is barely enough to buy food now, as the price of wheat flour and rice has increased so much. I am paying more than double than what I used to pay for these commodities only 2-3 years ago,” she lamented.

The YoY trend depicts increase of 34.96 percent, on account of rising prices of cigarettes (124.38 percent), tea (114.93 percent), wheat flour (110.08 percent), gas charges for Q1 (108.38 percent), broken basmati rice (79.11 percent), rice irri 6/9 (78.11 percent), potatoes (67.44 percent), bananas (67.33 percent), gents sponge chappal (58.05 percent), pulse moong (53.41 percent), bread (52.36 percent), pulse mash (52.32 percent), and salt (49.65 percent).

Prices of only four commodities declined on YoY basis, including tomatoes (29.71 percent), onions (17.94 percent), diesel (3.89 percent) and pulse masoor (0.91 percent).