Saturday Mar 25, 2023
KARACHI: All-time high price of wheat flour pushed weekly inflation up 1.80% week-on-week and 46.65% year-on-year during the seven-day period that ended on March 23, 2023, pointing to even tougher times ahead, The News reported Saturday.
Pakistan Bureau of Statistics (PBS) data issued on Friday attributed the surge in the sensitive price indicator (SPI) to the increase in prices of tomatoes (71.77%), wheat flour (42.32%), potatoes (11.47%), bananas (11.07%), tea (7.34%), georgette (2.11%), lawn (1.77%), long cloth (1.58%), pulse mash (1.57%), prepared tea (1.32%), and gur (1.03%).
On the other hand, the PBS noted a decrease in the prices of chicken (8.14%), chilli powder (2.31%), LPG (1.31%), mustard oil and garlic (1.19%) each, pulse gram and onions (1.06%) each, vegetable ghee 1kg (0.83%), cooking oil 5 litres (0.21%), pulse moong (0.17%), pulse masoor (0.15%) and eggs (0.03%).
For the week under review, the SPI was recorded at 250.66 points against 246.22 points registered last week and 170.92 points recorded during the week ended March 24, 2022.
Fahad Rauf, head of research at Ismail Iqbal Securities in his weekly note said the SPI saw a significant rise primarily due to a 42% increase in the price of a 20kg bag of wheat flour, which has reached an all-time high of Rs2,586.
On the other hand, prices of chicken have declined 8% WoW.
"The major reason behind the increase in wheat price is the change in subsidy mechanism. The government has now shifted from general subsidy to a targeted subsidy through BISP [Benazir Income Support Programme]," he said, adding with the onset of Ramadan, food prices would continue to rise.
"We expect March 2023 CPI [consumer price index] to come at 35.5% on a YoY basis," Rauf added.
The average price of wheat flour has jumped up 42.32% WoW and 120.66% YoY to stand at Rs2,586.37/20kg. Compared to last week, the price has jumped up by Rs769.12 from Rs1,817.25; from last year the price is higher by Rs1,414.29 from Rs1,172.08.
As per the city-wise breakdown of wheat flour bag prices given by PBS, the essential commodity was the most expensive for residents of Quetta at Rs2,889.99/20kg bag.
The PBS compiles the SPI via collecting prices of 51 essential items from 50 markets in 17 cities of the country.
During the week, out of 51 items, prices of 26 (50.98%) items increased, 12 (23.53%) items decreased and prices of 13 (25.49%) items remained unchanged.
The PBS data attributed the YoY rise in the SPI to the jump in the prices of onions (228.28%), cigarettes (165.88%), wheat flour (120.66%), gas charges for Q1 (108.38%), diesel (102.84%), tea (94.60%), bananas (89.84%), rice irri-6/9 (81.51%), broken basmati rice (81.22%), petrol (81.17%), eggs (79.56%), pulse moong (68.64%), potatoes (57.21%) and pulse mash (56.46%).
It also noted a decrease in the prices of chilli powder (9.56%).
Sticky inflation numbers along with the stalled International Monetary Fund (IMF) programme, pushed the State Bank of Pakistan (SBP) to raise its benchmark interest rate by 300 basis points to a 26-year high on March 2, 2023.
The central bank is scheduled to meet on April 4 for its monetary policy committee, where it is expected that the policy rate would be raised by another 100bps to 21%.
The expected outcome of the rate hikes includes the spread of massive poverty. For the groups spending up to Rs17,732,; Rs17,733-22,888; Rs22,889-29,517; Rs29,518-44,175; and above Rs44,175; YoY SPI increased 43.62, 46.40, 46.31, 46.44, and 48.35% respectively.
Originally published in The News