Weekly inflation hits 9-month high as electricity prices soar

KARACHI: Hike in power tariff pushes Pakistan’s weekly inflation up 3.73 percent week-on-week, the highest in nine months, with annualised inflation up 29.21 percent during the period ended July 26.

The Pakistan Bureau of Statistics (PBS) data issued on Friday attributed the increase in the sensitive price indicator (SPI) to increase in the prices of chili powder (28.98 percent), electricity for Q1 (20.98 percent), tomatoes (19.71 percent), eggs (4.77 percent), LPG (4.12 percent), garlic (3.09 percent), onions (2.58 percent), gur (2.18 percent), and potatoes (2.09 percent).

On the other hand major decrease was observed in the prices of bananas (5.36 percent), sugar (1.15 percent), vegetable ghee 2.5kg (0.93 percent), cooking oil 2.5kg (0.89 percent), vegetable ghee 1kg (0.72 percent), wheat flour (0.17 percent), and pulse moong (0.16 percent).

Fahad Rauf, head of research at Ismail Iqbal Securities said this was the highest WoW change in SPI since October 2022. “The change is dominated by electricity charges. The government has notified an increase in base tariff by up to 27 percent for residential consumers,” he added.

He also said that broadly, inflationary pressures have eased recently and consumer price index was expected to continue its decline gradually over the next few months.

“Full year average inflation is expected to be close to 20 percent as compared to IMF expectations of 26 percent,” Rauf added.

SPI for the week ended July 26, 2023 recorded the highest WoW increase since October 27, 2022. In October 2022, it was up 4.13 percent WoW and 30.68 percent YoY.

For the week under review, SPI was recorded at 268.08 points against 258.45 points registered last week and 207.47 points recorded during the week ended July 28, 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 20 (39.22 percent) items increased, 7 (13.73 percent) items decreased and prices of 24 (47.05 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 and electricity went up; wheat flour, sugar, and vegetable ghee decreased; whereas prices of firewood, and long cloth remained unchanged.

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 28.92, 26.65, 31.71, 32.74, and 30.31 percent respectively.

The YoY trend depicts increase of 29.21 percent, on account of rising prices of wheat flour (132.36 percent), cigarettes (110.75 percent), gas charges for Q1 (108.38 percent), tea (97.71 percent), broken basmati rice (79.60 percent), rice irri-6/9 (73.23 percent), sugar (63.72 percent), potatoes (62.65 percent), tomatoes (60.50 percent), gents sponge chappal (58.05 percent), gur (57.57 percent), chili powder (55.00 percent), and chicken (54.52 percent).

Commodities that registered YoY decline in prices included onions (25.53 percent), electricity for Q1 (18.06 percent), pulse masoor (11.49 percent), LPG (3.75 percent), and vegetable ghee 1kg (0.77 percent).