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Monday December 23, 2024

Worse to come: Weekly inflation hits 16-week high at 2.89pc

Every rise in petrol and diesel rates spreads a wave of commotion in the lower and middle income groups

By Andaleeb Rizvi
February 18, 2023
People are busy in buying vegetables in Sunday weekly bazaar at Shadman area in Lahore. — Online/File
People are busy in buying vegetables in Sunday weekly bazaar at Shadman area in Lahore. — Online/File

KARACHI: Weekly inflation touched a 16-week high to stand at 2.89 percent during the seven-day period ended February 16, with prices of edible oil and fuel oil rising up to 8 percent as per official data.

Pakistan Bureau of Statistics (PBS) data issued on Friday also showed that the annualised sensitive price indicator (SPI) inflation went up 38.42 percent, registering a 22-week high.

The surge in SPI was attributed to a week-on-week increase in prices of petrol (8.82 percent), cooking oil 5 litre (8.65 percent), vegetable ghee 1kg (8.02 percent), bananas (8.01 percent), chicken (7.49 percent), vegetable ghee 2.5kg (6.76 percent), diesel (6.49 percent) and cigarettes (6.18 percent).

Arif Habib Limited said this was the highest WoW number since October 27, 2022. Consumers saw SPI surge 4.13 percent at the end of October last year after government raised the electricity tariff for the quarter. Ordinary Pakistanis, who have been bearing the brunt of inflation, have been struggling to make ends meet amidst rising costs of basic commodities and stagnant or no wages.

For the groups spending up to Rs17,732; Rs17,733-22,888; Rs22,889-29,517; Rs29,518-44,175; and above Rs44,175; WoW SPI increased 2.45, 2.73, 2.79, 2.88, and 2.94 percent respectively.

On the other hand, YoY SPI for the expenditure groups went up 35.01, 36.53, 38.43, 39.65, and 39.41 percent respectively.

For the week under review, SPI was recorded at 234.77 points against 228.17 points registered last week and 169.61 points recorded during the week ended February 17, 2022.

The PBS data attributed the close to 39 percent YoY rise in SPI to jump in the prices of onions (433.44 percent), chicken (101.86 percent), diesel (81.36 percent), eggs (81.22 percent), rice irri-6/9 (74.12 percent), broken basmati rice (73.05 percent), petrol (69.87 percent), pulse moong (67.98 percent), bananas (67.68 percent), Lipton tea (63.89 percent), pulse gram (56.93 percent), bread (55.36 percent), pulse mash (53.42 percent), LPG (52.68 percent) and cigarettes (50.02 percent).

Average household budgets are collapsing under the strain of food and energy inflation, spiking fears that massive poverty would be the outcome of the recent decisions taken by the government to please the International Monetary Fund (IMF) for a meagre $1.1 billion bailout tranche.

Every rise in petrol and diesel rates spreads a wave of commotion in the lower and middle income groups, many of whom depend on rickshaws and ride-sharing apps to travel to and from work.

A teacher at a private institute, who wished to remain anonymous said, “If the price of petrol goes up again, and the cost of transportation continues to rise at this rate, I will have no option but to quit my job.”

Sharing the math, she explained that out of the Rs35,000 she earns at the private school, she currently spent up to almost Rs11,000/month on transport as she lived in an area not well-served by the existing public transportation infrastructure. This, she said meant that the share of transport in her income was 32 percent.

Budgeting guides generally state that the share of transportation, such as bus, taxi, fuel, insurance maintenance etc should be between 15-20 percent. However, in real terms, this is generally not the case for most people due to poor public transport planning.

Fahad Rauf, head of research at Ismail Iqbal Securities in his weekly note said that the WoW increase in SPI was mainly because of rise in prices of petrol and cooking oil. On the other hand, there was a decline of 13.5 percent WoW in the prices of onions.

“The inflationary pressures are expected to intensify as the government has taken tax measures and made electricity, petroleum and gas price adjustments to unlock the IMF programme,” Rauf’s note added.