Weekly SPI eases after cut in fuel prices

KARACHI: Drop in fuel prices helped weekly inflation slide down 0.22 percent after almost 2 months, but on an annualised basis it remained more than a decade high at 32.82 percent during the seven-day period ended July 21.

Pakistan Bureau of Statistics (PBS) on Friday said decreased was observed in the prices of diesel (14.62 percent) and petrol (7.41 percent), tomatoes (7.04 percent), bananas (3.34 percent), vegetable ghee 1kg (1.14 percent), onions (0.46 percent), sugar (0.44 percent), vegetable ghee 2.5kg (0.42 percent), gur (0.32 percent), and broken basmati rice (0.19 percent). The joint impact of these commodities in overall sensitive price indicator was down 1.03 percent for the combined group.

Of these commodities, petrol and diesel had the highest impact. Last week, following a slide in global oil prices, the government had announced a cut in prices of fuel. That brought down petrol from Rs248.74 to Rs230.24, high speed diesel from Rs276.54 to Rs236, kerosene oil from Rs230.26 to Rs196.45, and light diesel oil from Rs226.15 to Rs191.44.

Arif Habib Limited said SPI for the week under review witnessed a “decline after 8 weeks”.

As per PBS data, SPI was down 0.26 percent week-on-week on May 26, 2022 when wheat prices had dropped in the country.

Fahad Rauf, head of research at Ismail Iqbal Securities in his note said inflationary pressures would likely increase due to potential increase in electricity prices.

“In the medium-term, 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.”

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 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, prices of milk, wheat flour, and long cloth increased; sugar, firewood, and vegetable ghee prices declined, whereas per unit price of electricity remained unchanged at Rs7.20.

NEPRA has allowed power distribution companies to increase the number of unprotected consumers, remove power subsidies given to exporting industries, charge commercial peak hours and to recover May fuel adjustment in July and August. The revised rates would be applicable nationwide including on consumers in the K-Electric’s service territory. These changes would likely have an impact on consumer bills as well as weekly inflation in the weeks ahead.

SPI was recorded at 200.10 points against 200.55 points registered during the week ended July 15.

SPI comprises of 51 essential items collected from 50 markets in 17 cities of the country. Increase in prices of these essential commodities also highlights in its wake the rising stress on Pakistani households and their ever dwindling incomes.

During the week, out of 51 items, prices of 31 (60.78 percent) items increased, 11 (21.57 percent) items decreased, and prices of only 9 (17.65 percent) items remained unchanged.

The YoY trend depicted an increase of 32.82 percent on account of surge in prices of diesel (106.16 percent), petrol (103.34 percent), pulse masoor (91.29 percent), onions (88.46 percent), vegetable ghee 1kg (76.85 percent), mustard oil (75.78 percent), cooking oil 5 litre (75.35 percent), vegetable ghee 2.5kg (71.71 percent), washing soap (60.25 percent), chicken (58.41 percent), gents sponge chappal (52.21 percent), pulse gram (51.46 percent), garlic (43.70 percent), and LPG (40.47 percent).

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 27.04, 30.97, 30.63, 31.62, and 33.54 percent, respectively.