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Monday August 15, 2022

SPI inflation up 0.82 percent on higher energy, food prices

Expert says SPI went up mainly due to increase in prices of perishable food items, particularly onions

August 06, 2022
The reason behind the increase in the price of onions was the torrential rains around the country, which severely disrupted the supply chain.
The reason behind the increase in the price of onions was the torrential rains around the country, which severely disrupted the supply chain.

KARACHI: Short supply of perishable foods on account of torrential rains pushed sensitive price indicator (SPI) to an annualised high of 38.63 percent with weekly inflation up 0.82 percent for the seven-day period ended August 4, 2022.

Pakistan Bureau of Statistics (PBS) data issued on Friday attributed the spike of almost 40 percent in year-on-year SPI to rising prices of diesel (109.15 percent), onions (107.95 percent), pulse masoor (106.71 percent), petrol (88.94 percent), cooking oil 5 litre (74.44 percent), mustard oil (73.89 percent), chicken (73.42 percent), vegetable ghee 1kg and 2kg (72.26 and 70.48 percent), washing soap (62.62 percent), pulse gram (59.07 percent), electricity for Q1 (52.61 percent), gents sponge chappal (52.21 percent), pulse mash (46.01 percent) and garlic (41.16 percent).

Fahad Rauf, head of research at Ismail Iqbal Securities reiterated said SPI went up mainly due to the increase in prices of perishable food items, particularly onions. The reason behind increase in price of onions were the torrential rains around the country, which severely disrupted the supply chain.

“We expect inflation to remain elevated in the near-term due to planned electricity tariff and possible gas price hike. On the other hand, any price cut in petroleum prices might help in limiting inflation,” Rauf said.

A majority of cooked foods in the country utilise an onion and tomato puree as a base. The price of onions jumped to Rs94.2/kg from Rs75.41/kg with tomatoes up at Rs82.91/kg from Rs74.07/kg.

With mostly stagnant wages, consumers have been reeling under skyrocketing prices of food and fuel. Last year on August 5, hi-speed diesel was being sold at Rs117.58/litre, but now it costs Rs245.92/litre.

Mehroze, a house worker said, “This inflation is breaking my back. Around 5kg fine aata (wheat flour) and 1kg cooking oil cost the same now; around Rs500. I cannot manage paying my daughter’s school fee regularly anymore.”

She explained that she stops some major expenses to save for her daughter’s fee, but even that has become difficult now because the school now charges Rs500 fine on being late.

Different weightages are assigned to various 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, sugar, long cloth and vegetable ghee 2.5kg went up; vegetable ghee 1kg declined, whereas prices of electricity and firewood remained stable.

For the groups spending up to Rs17,732; Rs17,733-22,888; Rs22,889-29,517; Rs29,518-44,175; and above Rs44,175; year-on-year SPI increased 32.88, 38.44, 36.26, 36.21, and 38.73 percent, respectively.

SPI comprises of 51 essential items collected from 50 markets in 17 cities of the country.

During the week, out of 51 items, prices of 33 (64.71 percent) items increased, 4 (7.84 percent) items decreased, and prices of only 14 (27.45 percent) items remained unchanged.

On WoW basis, PBS observed an increase in prices of onions (24.92 percent), tomatoes (11.93 percent), pulse moong (5.72 percent), pulse mash (5.28 percent), potatoes (5.03 percent), pulse masoor (4.43 percent), diesel (3.78 percent), pulse gram (2.69 percent), eggs (2.44 percent), powdered milk (1.61 percent), gur (1.53 percent), LPG (1.49 percent), salt (1.46 percent) and garlic (1.30 percent).

Joint impact of these commodities in overall SPI stood at 0.58 percent for the combined group.

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