Thursday April 18, 2024

SPI down 1.37pc as PM’s relief package pays off

By Andaleeb Rizvi
March 19, 2022

KARACHI: Government’s relief package has worked numerically to slash down weekly inflation by 1.37 percent week-on-week, pushing sensitive price index (SPI) to an almost two-year low during the seven-day period ended March 17, data showed on Friday.

Year-on-year numbers also eased to 15.12 percent, from 16.49 percent last week.

Pakistan Bureau of Statistics (PBS) data attributed the decline to drop in prices of tomatoes (12.04 percent), chicken (8.39 percent), garlic (2.04 percent), sugar (0.49 percent), potatoes (0.41 percent), pulse gram (0.31 percent), pulse mash (0.14 percent), electricity charges for Q1 (9.81 percent), and LPG (1.58 percent). The cumulative impact of these commodities in overall SPI was 2.05 percent for the combined group.

Arif Habib Limited and Topline Securities in their notes said this was the highest WoW decline since April 2, 2020. The index had declined by 2.01 percent WoW during the month of April in 2020, almost two years ago.

On year-on-year basis, SPI went up 15.12 percent for the combined group, with major rise in the prices of tomatoes (90.53 percent), LPG (73.18 percent), garlic (65.76 percent), mustard oil (58.57 percent), vegetable ghee 1kg (55.16 percent), cooking oil 5 litre (50.75 percent), vegetable ghee 2.5kg

(49.90 percent), washing soap (39.17 percent), pulse masoor (37.23 percent), petrol (33.42 percent), beef (24.84 percent) and diesel (23.75 percent).

Analyst Fahad Rauf of Ismail Iqbal Securities in his note said the WoW drop was “due to decrease in electricity charges after the applicability of prime minister's relief package. Along with this, seasonal drop in tomato prices also contributed towards ease in SPI. Based on these numbers, we estimate March 2022 CPI to stay flattish at 12.1 percent YoY.”

On February 28, Prime Minister Imran Khan announced the slashing of petroleum products’ price by Rs10/litre and electricity tariff by Rs5/unit to give some relief to the public. The PM announced the relief during his address about Pakistan’s economic situation, Pakistan Tehreek-e-Insaf’s performance in three-and-a-half years and challenges coming up in the wake of Russia-Ukraine crisis.

The package brought the price of petroleum to Rs150.63/litre down from Rs160.63/litre and diesel to Rs144.90/litre down from Rs154.86/litre during the week ended March 3. However, electricity prices were implemented during the week under review. The per unit price now stands at Rs6.25 down from Rs6.93.

PBS computes SPI inflation on a weekly basis to gauge the price movement of essential commodities at a shorter interval of time so as to review the price situation in the country. It comprises 51 essential items and the prices are collected from 50 markets in 17 cities of the country.

For the groups spending up to Rs17,732; Rs17,733-22,888; Rs22,889-29,517; Rs29,518-44,175; and above Rs44,175; WoW SPI decreased 0.99, 1.61, 1.12, 0.92, and 1.23 percent, respectively.

SPI was recorded at 169.06 points against 171.41 points registered previously. During the week, out of 51 items, prices of 29 items increased, nine items decreased, whereas prices of 13 items remained unchanged.

A consumer, Rehmat Bibi, who works as a house help, said even if petrol prices decline, “once fares or commodity prices go up, there is generally no turning back. Be it the fare of Qingqi or the price of cooking oil”.

PBS data attributes different weightages to the commodities in the SPI basket. Commodities with the highest weights for the lowest quintile include milk (17.5449 points), electricity (8.3627 points), wheat flour (6.1372 points), sugar (5.1148 points), firewood (5.0183 points), long cloth (4.2221 points), and vegetable ghee (3.2833 points).

Of these commodities, WoW prices of milk, wheat flour, long cloth, and vegetable ghee increased, electricity and sugar declined, whereas rates of only firewood remained the same.

Fresh milk, an essential in most households, is available for Rs116.43 compared to Rs116.18 last week and Rs107.15 last year. Vegetable ghee registered a massive jump in price. A 1kg pack of vegetable ghee costs Rs461.8 compared to Rs434.62 last week and Rs297.63 last year, whereas a 2.5kg pack is priced at Rs1,136,33 compared to Rs1,086.8 last week and Rs758.07 during the same week last year.

Cooking oil prices surged again this week due to changed in the global markets. The price of a five litre tin of cooking oil (Dalda or other similar brands) went up by Rs78.99 WoW and Rs761.43 YoY to stand at Rs2,261.66 during the week under review. Last week, the same tin was available for Rs2,182.67 and in 2020 the price was Rs1,500.23/tin.