Weekly inflation surges to 14-year high

KARACHI: Weekly inflation surged 3.38 percent week-on-week and 27.82 percent year-on-year hitting a 14-year high during the week ended June 16 following massive hike in petrol and diesel rates to appease the International Monetary Fund (IMF).

Pakistan Bureau of Statistics (PBS) data issued on Friday showed that prices of 71 percent of the commodities in the sensitive price index (SPI) basket shot up. Increase was observed in the prices of diesel (28.91 percent), gents sponge chappal (26.76 percent), gents sandal (15.40 percent), chicken (12.10 percent ), petrol (11.43 percent), potatoes (6.89 percent), electricity charges for Q1 (6.63 percent), cigarettes (6.27 percent), cooked daal (5.90 percent), pulse gram (5.29 percent) and cooked beef (5.19 percent). The joint impact of increase in prices of these commodities was 2.53 percent in overall SPI for the combined group.

Fahad Rauf, head of research at Ismail Iqbal Securities in his note attributed the hike in the sensitive price indicator (SPI) to sharp increase in prices of petrol, electricity, and chicken. “The quantum of increase has not been seen since 2008 global financial crisis,” he said, adding that inflationary pressures would likely continue as electricity and gas price increase would also be announced soon.

“Based on current numbers, we expect June 2022 CPI (consumer price index) at 17.6 percent,” Rauf said, pointing out that the removal of subsidy on electricity announced under the prime minister’s package was not yet reflected in SPI readings. “If removal is incorporated, CPI would reach 19 percent year-on-year.”

Fuel prices were updated on June 16 by Finance Minister Miftah Ismail.

According to PBS data, hi-speed diesel (HSD) now stands at Rs264.17/litre, up from Rs204.93/litre last week, and Rs113.57/litre during the same period last year. Petrol stands at Rs234.71/litre, up from Rs210.63/litre last week, and Rs111.68/litre last year. Since the coalition government took power, diesel price has surged by 82 percent, with petrol price up 56 percent. During the week ended April 7, 2022, only three days before Prime Minister Imran Khan lost the vote of no confidence, petrol was Rs150.63 and diesel was Rs144.9.

In the SPI basket, petrol weightage stands at 6.7 percent, while HSD stands at 0.087 percent for the combined group. This rapid change in fuel prices has put huge pressure on the masses, particularly those from the low and middle income groups. Stagnant wages added to the woes.

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 increased 2.85, 3,45, 3.10, 3.12, and 3.10 percent, respectively.

SPI was recorded at 178.12 points against 174.62 points registered previously.

SPI is computed on weekly basis to assess the price movements of essential commodities at a shorter interval of time to review the price situation in the country. It comprises of 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 36 (70.59 percent) items increased, 6 (11.76 percent) items decreased and 9 (17.65 percent) items remained stable.

On YoY basis, increase was noted in the prices of onions (135.31 percent), diesel (132.61 percent), tomatoes (117.27 percent), petrol (110.16 percent), vegetable ghee 1Kg (81.76 percent), mustard oil (80.88 percent), pulse masoor (74.77 percent), cooking oil 5 litre (71.52 percent), vegetable ghee 2.5kg (68.47 percent), LPG (60.97 percent), garlic (57.72 percent), washing soap (52.73 percent), gents sponge chappal (52.21 percent), and chicken (51.11 percent).