Gas prices drive 41% surge in weekly inflation
Published on: December 5, 2023.
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In the week ending November 30, Pakistan experienced a significant 41% increase in weekly inflation, as measured by the Sensitive Price Indicator (SPI), according to the Pakistan Bureau of Statistics (PBS). This surge was mainly attributed to a substantial rise in gas prices compared to the same week last year.
Although there was a 0.23% decline in weekly inflation compared to the previous week, the impact of the multiyear high recorded in the second week of November continued to influence the trajectory.
On a year-on-year basis, gas prices soared by an alarming 1,108.59% during the reviewed week. Other significant increases included a 94.20% surge in cigarette prices, an 87.27% rise in wheat flour costs, and an 81.74% increase in chili powder prices.
Notably, prices of certain essential commodities experienced a substantial increase, such as garlic (73.65%), rice basmati broken (75.79%), and gents’ sponge chappal (58.05%).
In contrast, certain commodities saw a decline in prices on a week-on-week basis. Tomatoes led the downward trend with a reduction of 17.64%, followed by potatoes (5.11%) and chicken (3.58%). Other items that saw a dip included sugar, tea Lipton, and vegetable ghee.
Out of 51 items, prices of 13 witnessed an increase, 14 decreased, and 24 remained unchanged compared to the previous week.
This weekly inflation data coincided with the release of the monthly benchmark inflation reading, the Consumer Price Index (CPI), which recorded a 29.23% surge in November. The spike in gas prices continued to be the leading factor driving the monthly inflation rate on a year-on-year basis.
Looking ahead, Pakistan’s central bank has maintained its original forecast for the average inflation rate within the range of 20-22% for the fiscal year 2023-24, considering the impact of the fuel price hike. Research houses anticipate a meaningful deceleration in inflation from January 2024 onwards, with expectations of a slowdown to 15-17% by the end of FY24. This could potentially lead to a 7% reduction in the central bank’s policy rate to 15% by December 2024.
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