KARACHI:
The weekly inflation reading ticked up 0.04% due to a hike in food and energy prices in the week ending February 22, ending the downturn recorded in the past three consecutive weeks. According to Pakistan Bureau of Statistics’ (PBS) data, the inflation reading decelerated to a 13-week low at 30.68% for the week compared to the same week last year, but it still remained elevated as many essential commodities continued to become expensive for various reasons, significantly squeezing people’s purchasing power.
The bureau reported that tomatoes recorded the single largest increase of 22.71% in a week to Rs132.54/kg compared to Rs108.01/kg in the previous week. It was followed by bananas, which increased by 7.40% to Rs136.38/dozen in the week compared to Rs126.98/dozen in the prior week. The price of high-speed diesel went up by 3.02% to Rs288.39/litre compared to Rs279.93/litre. Chicken farm broiler (live) prices increased by 1.22% to Rs454.94/kg in the week under review compared to Rs449.54/kg in the last week. Other commodities saw price increases in the range of 0.14-1%, including petrol, sugar, mutton, beef, curd, pulse moong, firewood, and georgette, according to the bureau.
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Gas price surge expected to propel inflation to 25%
During the week, out of 51 items, prices of 23 (45.10%) items increased, 8 (15.69%) items decreased, and 20 (39.21%) items remained unchanged. The year-on-year trend depicts an increase of 30.68%, with gas charges for Q1 increasing by 480%, tomatoes becoming costlier by 199.93%, and chili powder prices spiking by 81.74%. Other commodities shot up in the range of 34-66%, including wheat flour, gents sponge chappal, gents sandal, sugar, gur, salt powdered, garlic, and energy saver.
The latest increase in gas and petroleum product prices in February 2024 by the government are expected to keep the inflation rate on the higher side in the short run, but it is hoped to start sharply decelerating in the weeks and months to come due to the high base effect. A local research house estimated that the gas price hike would take inflation up by 43 basis points to 24.91% in FY24 full year. The State Bank of Pakistan (SBP) has revised up its projection for the benchmark monthly inflation reading (CPI index) to 23-25% in late January 2024 for FY24 compared to its July 2023 forecast for 20-22% for the year. It revised the projection following the first gas price hike announced in November 2023, stating that the impact of the rise on the inflation rate was higher than its estimates.
Local brokerage houses have estimated the rate for the outgoing month of February at around 24%.
Published in The Express Tribune, February 24th, 2024.
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