Weekly inflation remains at a six-month peak due to rising food and gas prices
Published on: December 16, 2023.
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Weekly Inflation Remains at Six-Month High in Pakistan
The weekly inflation rate in Pakistan stayed at a six-month high of 43.16 percent in the week ending on December 14, according to official data released on Friday. This surge in inflation has put immense pressure on consumers due to soaring food prices, with items like sugar, pulses, eggs, and rice experiencing significant price increases throughout the year. The Pakistan Bureau of Statistics reported that the Sensitive Price Indicator (SPI) decreased by 0.06 percent from the previous week.
Food items have been the main drivers of inflation in the country. This week’s inflation rate is the highest since the week of June 1, when the SPI inflation was recorded at 43.17 percent. It also marks the fifth consecutive week that the SPI inflation has remained above 40 percent. In recent weeks, the SPI was at 41.9 percent, 41.13 percent, 41.06 percent, and 42.68 percent, respectively.
This surge in inflation comes as Pakistan faces severe inflationary pressures. The State Bank of Pakistan (SBP) decided to keep its benchmark interest rate at a record high of 22 percent earlier this week, as it awaits signs of easing inflation after a recent increase in gas prices. In response to high inflation, the SBP has raised interest rates by a total of 15 percentage points over the past two years.
The SBP is optimistic that headline inflation will significantly decline in the second half of FY24 due to various factors such as contained aggregate demand, eased supply constraints, moderation in international commodity prices, and a favorable base effect.
According to data from the Pakistan Bureau of Statistics, gas prices have surged by a staggering 1108.6 percent over the year, reaching Rs1,711 rupees per MMBtu for consumers using up to 3.3719 MMBtu. Cigarette prices have increased by 93.2 percent, chili powder by 81.7 percent, wheat flour by 81.4 percent, garlic by 71.2 percent, broken rice basmati by 64.3 percent, rice IRRI-6/9 by 60.6 percent, and sugar by 50.5 percent.
The inflation bulletin also highlights the impact on different income groups. For individuals in the lowest income slab, earning up to Rs17,732 per month, the SPI inflation stood at 35.59 percent. Meanwhile, those in the group spending more than Rs44,175 per month experienced an inflation rate of 41.47 percent. The middle quintile (Rs22,889 to Rs29,517) had the highest weekly inflation rate among all groups at 46.99 percent.
Out of the 51 items monitored by the SPI, 19 items witnessed price increases, while 10 items recorded a decrease, and 22 items remained unchanged.
Notable price hikes in the past week include sugar by 6.02 percent, gram pulse by 2.57 percent, eggs (farm) by 2.33 percent, rice IRRI-6/9 by 1.54 percent, and moong pulse by 1.23 percent. On the other hand, there have been price reductions in potatoes by 12.2 percent, tomatoes by 5.2 percent, tea Lipton by 2.6 percent, and rice basmati broken by 0.52 percent, among others.
In conclusion, Pakistan is currently grappling with a high inflation rate, and food items have been primarily responsible for driving up prices. Consumers are feeling the squeeze as essentials like sugar, pulses, eggs, and rice become more expensive. The State Bank of Pakistan has taken measures to address this issue, but it remains to be seen how inflation will be managed in the coming months.
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