Inflation Surges to 8-Month Peak of 44.64%
Published on: January 21, 2024.
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Weekly Inflation Reaches Eight-Month High in Pakistan
The Sensitive Price Indicator (SPI) report for the week ended Thursday shows that weekly inflation in Pakistan has reached an eight-month high at 44.64%. This is driven by increased prices of both energy and food products compared to the same week last year. Despite the State Bank of Pakistan maintaining a robust interest rate of 22% since June 2023, the SPI has seen a 0.34% increase, demonstrating its resilience.
The SPI is based on 51 essential items from 50 markets in 17 cities, and it highlights alarming increases in various commodities. Gas charges for Q1 have skyrocketed by 1108.59% to Rs1,711 per unit (million British thermal unit/mmbtu). Additionally, tomatoes have become 183.16% more expensive at Rs153.38 per kilogram. Cigarettes (Capstan) have seen a surge of 93.22%, reaching Rs221.80, and Chilies Powder (National 200-gram packet) has experienced an 81.74% hike to Rs400. Wheat Flour (20kg bag) has increased by 65.03% to reach Rs2,811.833 for the week compared to the same period last year.
Other goods such as garlic, gents sponge chappal, sugar, gents sandal, rice irri-6/9, gur, and eggs have also witnessed price hikes ranging from 47-60%. Out of the 51 items, 43.14% (22 items) have seen price increases, 15.68% (8 items) have seen decreases, and 41.18% (21 items) have remained unchanged compared to the previous week.
The persistently high interest rate implemented by the State Bank of Pakistan (SBP) to discourage non-essential purchases has been offset by administrative measures such as government-approved increases in gas prices. These measures have significantly contributed to the inflation surge in the country.
The benchmark monthly inflation reading, measured through the Consumer Price Index (CPI), reached a three-month high at 29.9% in December 2023. Government estimates predict that inflation may remain elevated in January and February, but there is an anticipated deceleration afterward. This could potentially allow the central bank to reduce the interest rate, fostering moderate economic activities in FY24.
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