“Inflation remains high due to rising food and energy costs”
Published on: October 14, 2023.
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Rising Weekly Inflation in Pakistan Linked to Higher Food and Energy Costs
According to a recent report by Fitch Solutions, the devaluation of the Pakistani rupee might intensify imported inflation, potentially leading to sharp policy rate hikes from the State Bank of Pakistan (SBP).
The Sensitive Price Indicator (SPI), which measures the weekly inflation, witnessed a 0.30% hike due to amplified prices of food and energy in the week that ended on October 12, 2023. The Pakistan Bureau of Statistics (PBS) reported that compared to the same week in the previous year, the index had surged by 38.28%.
Changes in the Prices of Essential Commodities
Among the 51 essential goods monitored by the SPI, prices of 17 items, accounting for a third of the overall products, underwent a surge. Meanwhile, 17 other items experienced a dip in prices, and the prices of the remaining 17 products remained stable. These price fluctuations were recorded across 50 markets in 17 cities of Pakistan.
Weekly data demonstrates that prices of a few items such as tomatoes, eggs, powdered salt, cooked beef, garlic, tea, beef, and potatoes experienced increases ranging from 0.35% to 6.28%. In terms of non-food commodities, electricity charges for Q1 rose by 8.59%, while energy savers, shirting, and LPG witnessed price hikes ranging from 0.31% to 0.55%.
Dynamic Year-On-Year Trend
Year-on-year data depicts that the prices of different essentials, including electricity and gas charges for Q1, cigarettes, basmati rice pakistan, chilli powder, wheat flour, sugar, powdered salt, tea, and gents’ sponge chappal have soared in the range of 58 – 137%.
Fueling Factors of Inflation
For the past few years, Pakistan has been grappling with high inflation rates, partially due to the substantial depreciation of the rupee against the US dollar. Global surge in commodity prices, particularly in the energy sector, also contribute significantly as Pakistan largely depends on costly imports to meet its energy needs.
Future Trends and Measures
Inflation, as measured by the Consumer Price Index, reached a four-month peak at 31.4% in September 2023, after hitting a record six-decade high of 38% in May. Nonetheless, the inflation rate is projected to slow down from January 2024 onwards. The recent rupee appreciation of 10.62% accomplished within 27 working days is anticipated to nudge the government towards slashing petroleum product prices in the upcoming fortnightly review scheduled for the latter half of October.
However, with the potential increase in gas prices due to the conditions of the International Monetary Fund (IMF) loan programme, inflation rate in the foreseeable future may remain high.
Source: tribune.com.pk
