Weekly inflation eases as chicken, sugar prices drop

KARACHI: Weekly inflation declined 0.25 percent in the week ended on September 14, after staying up for seven consecutive weeks, as prices of chicken and sugar slumped in the local markets following a government crackdown on hoarders and smugglers.

The SPI increased by 26.25 percent year-on-year during the seven-day period ended September 14, compared to the corresponding period last year.

The Pakistan Bureau of Statistics (PBS) data published on Friday attributed the slight decrease in the sensitive price indicator (SPI) inflation to drop in the prices of food items, including sugar (9.11 percent), chicken (5.47 percent), eggs (2.79 percent), bananas (0.86 percent), tea (0.59 percent), pulse gram (0.57 percent), vegetable 1kg (0.16 percent) and cooking oil 5 litre (0.10 percent).

On the other hand, major increase was observed in the prices of tomatoes (4.29 percent), garlic (4.21 percent), bread (3.92 percent), onions (3.60 percent), pulse masoor (3.19 percent), salt (2.77 percent), shirting (1.68 percent), pulse moong (1.66 percent), printed lawn (1.32 percent), pulse mash (1.25 percent) and long cloth (1.18 percent).

For the week under review, SPI was recorded at 279.18 points against 279.87 points registered last week and 221.14 points recorded during the week ended September 15, 2022.

Arif Habib Limited said weekly inflation eased down by 0.25 percent week-on-week “after increasing consecutively for seven weeks”.

Fahad Rauf, head of research at Ismail Iqbal Securities, said the increase in SPI was mainly led by a drop in chicken and sugar prices.

Decline in the price of sugar has been attributed to the crackdown on sugar hoarders. The caretaker government has initiated the action to end artificial increase in the sweetener’s prices.

However, for the coming weeks, energy inflation would increase as petroleum prices are expected to go up for the next fortnight, while a gas price hike was also pending, Rauf said.

“CPI (consumer price index) for September 2023 would likely increase to over 30 percent vs. 27 percent in August 2023, due to low base effect. However, the reading would fall from October. The same was also highlighted in recent MPS (monetary policy statement),” he added. On Thursday, the State Bank of Pakistan unexpectedly left its benchmark interest rate unchanged at 22 percent for its second consecutive meeting, as it did not see any indications of an overheating economy or rising inflation pressures.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 24 (47.06 percent) items increased, 8 (15.69 percent) items decreased and 19 (37.25 percent) items remained stable.

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, and long cloth increased; sugar, and vegetable ghee 1kg decreased; whereas prices of electricity, firewood, long cloth, and vegetable 2.5kg 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 26.53, 23.84, 28.03, 29.27, and 27.19 percent respectively.