Weekly inflation, as measured by the Sensitive Price Indicator (SPI), saw a slight uptick of 0.11% for the week ending October 5, 2023, compared to the previous week. The increase was primarily attributed to rising food and fuel prices, according to data released by the Pakistan Bureau of Statistics (PBS).
The most significant price increases were observed in food items, with tomatoes surging by 12.45%, onions by 11.96%, garlic by 2.59%, potatoes by 1.81%, cooked daal by 1.27%, eggs by 0.84%, beef by 0.53%, and the price of bread increasing by 0.52% on a week-on-week basis.
Among non-food items, liquefied petroleum gas (LPG) prices increased by 3.11%, firewood by 0.76%, and the price of long cloth rose by 0.51% during the same week.
Out of 51 items monitored, prices of 19 (37.26%) items increased, 16 (31.37%) items decreased, and 16 (31.37%) items remained unchanged during the week.
The year-on-year trend reveals a substantial increase in several essential items, including electricity charges for Q1, which increased by 118.16%, gas charges for Q1, surging by 108.38%, cigarettes by 94.69%, rice basmati broken by 87.60%, and chili powder by 84.84%. Sugar prices also rose by 79.55%, while rice Irri-6/9 increased by 78.69%, and wheat flour by 77.91%.
Experts have expressed concerns that inflation may remain elevated in the short to medium term. The government is reportedly considering a significant increase in pipelined gas prices to fulfil its commitments to the International Monetary Fund (IMF) and continue its participation in the $3 billion nine-month loan programme initiated in July 2023. The aim is to address the mounting gas circular debt, which has surpassed Rs2.5 billion. However, this price hike may contribute to sustained high inflation rates.
Simultaneously, the government is contemplating significant reductions in petroleum product prices, as the import of fuel has become more affordable due to a recent nearly 9% recovery in the rupee against the US dollar over the past month. These potential reductions in petroleum prices could help control inflation and create a path for the government to increase gas prices in compliance with IMF conditions.
The monthly inflation rate reached a four-month high at 31.4% in September. International financial institutions have projected that the average monthly inflation rate will be approximately 29% in FY24, contrasting with the central bank’s assumption of 21-22% for the year.
Published in The Express Tribune, October 7th, 2023.
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