Saturday, April 29, 2023

Back-breaking inflation continues to pile up misery on poor as SPI spikes to 46.82%

PBS attributes increase in weekly inflation to the rise in prices of potatoes, chicken, wheat flour, gur, bread, and rice

People are buying grocery from stalls at weekly Sunday Market in Lahore on April 2, 2023. — Online
People are buying grocery from stalls at weekly "Sunday Market" in Lahore on April 2, 2023. — Online

  • PBS attributes increase to the rise in prices of potatoes, chicken.
  • Major decrease was observed in the prices of tomatoes, bananas.
  • During week ending April 27, prices of 21 essential items increased.

KARACHI: The government’s failure to keep prices under control has decimated citizens’ purchasing power as the record-high inflation continues to break back of the lower and middle income groups in the poor country of 220 million.

The Pakistan Bureau of Statistics (PBS), in its weekly bulletin, reported that the weekly inflation rose by 46.82% year-on-year and 0.15% week-on-week during the seven-day period ending on April 27.

The national data collecting agency attributed the increase in the sensitive price indicator (SPI) to the rise in prices of potatoes (8.22%), chicken (1.75%), wheat flour (1.55%), gur (1.23%), bread (1.13%), and rice irri-6/9 (1.01%).

On the other hand, major decrease was observed in the prices of:

  • Tomatoes — 19.20%,
  • Bananas — 5.39%, 
  • Onions — 1.40%, 
  • Sugar — 1.19%, 
  • LPG — 1.09%, 
  • Pulse masoor — 0.98%, and 
  • Mustard oil — 0.39%

For the week under review, SPI was recorded at 252.20 points against 251.83 points registered last week and 171.78 points recorded during the week ended on April 28, 2022.

Fahad Rauf, head of research at Ismail Iqbal Securities said that SPI went up moderately mainly because of an increase in the prices of potatoes and mutton.

The price trend of perishable food items during the Eid week has been mixed, with prices of potatoes, chicken, and mutton going up and prices of tomatoes, bananas, and onions going down.

“We expect April 2023 CPI (consumer price index) to come around 38% vs 35.4% in March 2023, where the month-on-month increase is mainly expected from house rent revision and higher wheat prices,” Rauf added.

In a forecast, Ismail Iqbal Securities said: “Considering persistent inflationary pressures, and the absence of the International Monetary Fund (IMF) programme, another rate hike cannot be ruled out. SBP might look to hold another earlier than scheduled MPC (Monetary Policy Committee) meeting," he said.

Another hike in interest rates would further discourage businesses, which have already put their expansion plans on the backburner and capped hiring. 

Import restrictions have also increased the woes for industries and businesses that have been facing frequent shutdowns; which means uncertain or no wages for millions of workers.

PBS compiles 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 21 (41.17%) items increased, seven (13.73%) items decreased and prices of 23 (45.10%) items remained unchanged.

Different weightages are assigned to various commodities in the SPI basket. Commodities with the highest weights for the lowest quintile include:

  • Milk — 17.5449%, 
  • Electricity — 8.3627%, 
  • Wheat flour — 6.1372%, 
  • Sugar — 5.1148%, 
  • Firewood — 5.0183%, 
  • Long cloth — 4.2221%, 
  • Vegetable ghee — 3.2833%

Of these commodities, the price of milk and wheat flour increased; sugar decreased; whereas prices of electricity, firewood, long cloth and vegetable ghee remained unchanged. However, the prices of all these commodities went up on a yearly basis.