Weekly inflation surges 33.66pc YoY

KARACHI: Weekly inflation eased to 1.32 percent from 3.63 percent, but remained much higher on an annualised basis at 33.66 percent during the seven-day period ended July 6, mainly due to massive surge in fuel prices.

The rise in the sensitive price indicator (SPI), published by the Pakistan Bureau of Statistics (PBS) on Thursday, was in line with analysts’ expectations.

The PBS noted an increase in prices of petrol (6.36 percent), diesel (5.06 percent), garlic (5.06 percent), potatoes (2.57 percent), LPG (2.33 percent), vegetable ghee 2.5kg (1.64 percent), cooked daal (1.50 percent), wheat flour (1.46 percent), pulse gram (1.32 percent), tea prepared (1.09 percent) and pulse masoor (1.02 percent). Joint impact of these commodities in overall SPI for the combined group was 0.85 percent.

Topline Securities CEO and Founder Mohammed Sohail said, “This (the increase in SPI) was expected after massive rise in petrol and diesel prices. This trend will likely cool down in the next few months, once the impact of oil price rise is adjusted.”

Although the increase has been in line with analysts’ expectations, SPI – computed on weekly basis to assess the price movements of essential commodities at shorter intervals – has risen to over a decade high on year-on-year basis.

SPI comprises of 51 essential items collected from 50 markets in 17 cities of the country, and the increase in prices of these commodities also highlights in its wake the increasing stress on Pakistani households, particularly those from the lower and middle income categories.

Ismail Iqbal Securities Analyst Fahad Rauf said the inflationary pressures would likely continue as electricity and gas prices would likely increase soon. “We expect CPI (consumer price index) to maintain its uptrend due to energy price adjustments. SBP also expects CPI to remain elevated in FY23 and estimated to average 18-20 percent.”

During the week, out of 51 items, prices of 30 (58.82 percent) items increased, 5 (9.81 percent) items decreased, and prices of 16 (31.37 percent) items remained stable.

The YoY trend depicted an increase of 33.66 percent on account of surge in prices of diesel (141.46 percent), petrol (119.61 percent), onions (101.98 percent), pulse masoor (88.16 percent), vegetable ghee 1kg (83.03 percent), cooking oil 5 litre (79.29 percent), mustard oil (77.60 percent), vegetable ghee 2.5 kg (74.87 percent), washing soap (57.43 percent), gents sponge chappal (52.21 percent), pulse gram (51.80 percent), LPG (49.11 percent), tomatoes (44.71 percent), garlic (43.23 percent), and chicken (41.09 percent).

Since April, the coalition government has raised the price of petrol by almost Rs99/litre. The first increase was made on May 25, when the price of the commodity was jacked up by Rs30/litre. That was followed Rs30 hike on June 2, Rs24 hike on June 15, and then another increase of Rs14.85/litre on July 1.

Purchasing power of the masses has been eroding fast with rising commodity prices, increasing the risks for the fragile coalition government.

The price of LPG cylinder measuring 11.67kg has jumped to Rs2,526.41 from Rs2,468.82 last week and Rs1,694.27 last year. Similarly, a 5 litre tin of cooking oil was now being sold for Rs2,825.97, up from Rs2,807.84 last week and Rs1,576.23 in the same period last year.

Wheat flour, an essential in all households now costs Rs1,238/20kg bag, compared to Rs1,221.03 last week and Rs1,122.72 last year. On August 16, 2018, it was priced at Rs771.46/20kg, as per PBS data. A kilo pouch of vegetable ghee costs Rs575.79, compared to Rs572.18 last week and Rs314.59 last year. The same commodity was being sold for Rs150.32 during the week ended August 16, 2018.

These changes in prices have wreaked havoc on all expenditure groups. 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 0.83, 0.98, 1.07, 1.23, and 1.51 percent, respectively; with YoY up 27.31, 31.28, 31.03, 32.20, and 34.82 percent, respectively. SPI was recorded at 200.53 points against 197.92 points registered previously.