Friday May 27, 2022

Soaring wheat, chicken prices fuel weekly inflation

May 14, 2022

KARACHI: Hike in prices of wheat flour and chicken pushed weekly inflation up 0.49 percent week-on-week and 15.85 percent year-on-year during the seven-day period ended May 12, bringing more miseries to the lower and middle income groups.

Pakistan Bureau of Statistics (PBS) data attributed the increase to rising prices of wheat flour (41.78 percent), chicken (12.13 percent), potatoes (7.04 percent), eggs (5.08 percent), pulse masoor (4.79 percent), onions (4.74 percent), pulse gram (2.29 percent), pulse mash (2.05 percent), mustard oil (1.97 percent), mutton (1.64 percent), prepared tea (1.16 percent), cigarettes (2.62 percent), and matchbox (1.31 percent). The joint impact of these commodities was 1.96 percent in the overall sensitive price indicator (SPI) for the combined group.

On the other hand, decrease was observed in the prices of tomatoes (12.01 percent), electricity for Q1 (10.66 percent), bananas (5.87 percent), firewood (0.43 percent),

sugar (0.15 percent) and LPG

(0.11 percent).

Analyst Fahad Rauf of Ismail Iqbal Securities in his note said SPI increased, “mainly due to sharp increase in prices of wheat and chicken”; however, the impact of higher food inflation was diluted by decline in electricity charges. NEPRA approved a lower fuel adjustment this month as compared to the previous month.

“Based on current numbers, we expect CPI (consumer price index) at 14.3 percent in May 2022”, but upside risks remain from petroleum price increase. If price differential claims (PDC) were removed, inflation would be close to 15 percent.

“Going forward, the inflation trajectory would mainly depend upon government’s decision on energy subsidies, measures in annual budget, and international commodity prices,” Rauf concluded.

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.

During the week, out of 51 items, prices of 28 items increased, six items decreased, whereas prices of 17 items remained unchanged.

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 wheat flour and vegetable ghee 2.5kg tin increased; electricity, sugar and firewood decreased; and prices of milk, vegetable ghee 1kg, and long cloth remained the same.

Wheat flour bag of 20kg is now priced at Rs1,370.41 compared to Rs966.56 last week. Average price of a 2.5kg pouch of vegetable ghee increased to Rs1,228.19 during the week, up from Rs1,227.90 last week, and Rs770.23 last year. On August 16, 2018, vegetable ghee was being sold for Rs150.32/1kg pouch. SPI was recorded at 172.63 points against 171.78 points registered previously.