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Thursday June 13, 2024

Weekly inflation surges to highest level in three months on fuel costs

By Andaleeb Rizvi
September 23, 2023

KARACHI: Pakistan’s short-term inflation jumped up 0.93 percent week-on-week and 38.66 percent year-on-year, touching a 15-week high on annualised basis on the back of massive hike in petrol and diesel rates.

The Pakistan Bureau of Statistics (PBS) data published on Friday attributed the increase in the sensitive price indicator (SPI) inflation for the seven-day period ended September 21, to the rise in prices of chicken (8.49%), petrol (8.51%), diesel (5.54%), garlic (5.19%), onions (3.02%), shirting (1.81%), and matchbox (1.42%).

On the other hand, major increase was observed in the prices of tomatoes (11.11%), sugar (3.57%), bananas (2.03%), potatoes (1.89%), wheat flour (0.77%), gur (0.62%), mustard oil (0.45%), vegetable ghee 2.5kg (0.31%), cooking oil 5 litre (0.20%), pulse gram (0.18%) and tea (0.17%).

For the week under review, SPI was recorded at 281.77 points against 279.18 points registered last week and 203.21 points recorded during the week ended September 22, 2022.

Topline Securities on its social media said, “Pakistan's weekly SPI jumped to 38.7 percent YoY, which is highest level after 15 weeks.”

Weekly inflation was up 39.26 percent on June 8, 2023 as per the PBS record.

Government decision to raise the prices of petrol and diesel in view of the increase in international petroleum rates had a massive impact on pushing short-term inflation higher, which analysts had already predicted.

The caretaker government last Friday hiked petrol prices by more than Rs26 and diesel by over Rs17 per litre for the current fortnight. As a result, the price of petrol now stands at Rs331.38 per litre, whereas high-speed disel stands at Rs329.18.

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 22 (43.14 percent) items increased, 11 (21.57 percent) items decreased and 18 (35.29 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 sugar, wheat flour, and vegetable ghee 2.5kg went down, whereas the price of milk, electricity, firewood, long cloth, and vegetable ghee 1kg remained unchanged. It is after months that none of the commodities that have the highest share in the SPI basket for the lowest quintile registered a surge in prices. Decline in the price of sugar can be attributed to the crackdown on hoarders. The caretaker government initiated the action to end artificial increase in the sweetener’s price.

Energy inflation would likely increase further, as a gas price hike is also pending.

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 38.27, 41.00, 39.84, 38.60, and 34.28 percent respectively.

PBS data shows that the highest increase in SPI was faced by those spending up to Rs22,888, with the lowest impact on those spending more than Rs44,175.