Weekly inflation falls to lowest level since Oct 2022

KARACHI: Weekly inflation rate eased to 28.55 percent in the week to July 6, its lowest level in nine months, as food and energy prices moderated, official data showed on Friday.

The sensitive price indicator (SPI) went up 0.70 percent week-on-week and 28.55 percent year-on-year, the Pakistan Bureau of Statistics (PBS) showed.

The PBS attributed the current increase in the SPI to increase in food prices, including tomatoes (42.25 percent), onions (8.70 percent), potatoes (4.79 percent), wheat flour (4.05 percent), gur (4.01 percent) and sugar (3.48 percent), and non-food items, including shirting (3.02 percent) and diesel (2.95 percent).

On the other hand major decrease was observed in the prices of bananas (7.51 percent), chicken (2.80 percent), eggs (1.17 percent), LPG (0.96 percent), vegetable ghee 2.5kg (0.74 percent), cooking oil 5 litre (0.72 percent), vegetable ghee 1kg (0.71 percent), pulse masoor (0.47 percent), pulse moong (0.31 percent) and pulse gram (0.24 percent).

Topline Securities on its Twitter handle said, “Pakistan’s weekly inflation (SPI) has dropped to 29 percent for the week ending July 6, 2023, which is the lowest since October 20, 2022.”

During the week ended October 20, 2022, Pakistan’s annualised inflation stood at 27.13 percent. Since that month, inflation has remained above 28 percent.

Analysts have reached a consensus that inflation has peaked, and was now moderating.

For the week under review, SPI was recorded at 257.79 points against 256 points registered last week and 200.53 points recorded during the week ended July 6, 2022.

Fahad Rauf, head of research at Ismail Iqbal Securities said that SPI went up mainly due to food inflation, and particularly because of higher wheat flour and milk prices. “The government is looking to import wheat to meet demand and bring down the prices,” he said, adding that the prices of perishables, mainly tomatoes increased on account of Eidul Azha.

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 27 (47.06 percent) items increased, 10 (19.62 percent) items decreased and prices of 17 (33.33 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, sugar, and long cloth went up; vegetable ghee decreased; whereas prices of electricity and firewood remained unchanged.

Price of a 20kg wheat flour bag now stands at Rs2,746.36 that is up from Rs2,639.51/bag in the week before Eid. PBS did not issue data during the week ended June 29, 2023 due to Eidul Azha holidays.

Residents of Karachi are paying the most for a wheat flour bag, which is being sold for anywhere between Rs150-190/kg in different markets of the city. Although, the official data shows the average price in the city at Rs2,957.16, it is higher by Rs210.80 from the national average.

During the week ended June 22, 2023, the average price of a 20kg bag was Rs2,639.51 while in the preceding week, the price was Rs2,514.99.

A retail shop owner in Karachi said that he was selling wheat flour for Rs160-170/kg, depending on the quality. “If someone is selling wheat flour for more than Rs170, they are stealing from the customers,” he said.

A city-wise breakdown of the PBS price statistics showed that last week, the commodity proved to be the most expensive for Islamabad after Karachi, at Rs2,933.29/bag. Among other cities, from the highest price to lowest, Rawalpindi residents paid Rs2,924.41/bag; Hyderabad residents paid Rs2,879.98; Sialkot Rs2,800; Sukkur Rs2,760.60; Gujranwala and Sargodha Rs2,733; Lahore Rs2,730.84; Larkana Rs2,726; Peshawar Rs2,720.80; Multan Rs2,704.86; Quetta Rs2,689.99; Faisalabad Rs2,632.91; Khuzdar and Bahawalpur Rs2,600; and Bannu residents paid Rs2,599.68, which was the lowest in all 17 urban centres.

The YoY trend depicts increase of 28.55 percent, on account of rising prices of wheat flour (121.69 percent), cigarettes (112.94 percent), gas charges for Q1 (108.38percent), tea (102.86percent), broken basmati rice (77.40 percent), rice irri-6/9 (74.61 percent), potatoes (69.06 percent), chicken (63.22 percent), gents sponge chappal (58.05percent), powdered salt (51.61percent), sugar (50.08 percent), bananas (48.96 percent) and bread (46.86 percent).