close
Monday December 23, 2024

Weekly inflation accelerates 1.80pc on record flour price

All-time high price of wheat flour pushed weekly inflation up 1.80% week-on-week and 46.65% year-on-year during seven-day period

By Andaleeb Rizvi
March 25, 2023
A representational image of people trying to get hold of a flour sack at a distribution point. — Twitter
A representational image of people trying to get hold of a flour sack at a distribution point. — Twitter

KARACHI: All-time high price of wheat flour pushed weekly inflation up 1.80 percent week-on-week and 46.65 percent year-on-year during the seven-day period ended March 23, 2023, pointing to even tougher times ahead. 

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 percent), wheat flour (42.32 percent), potatoes (11.47 percent), bananas (11.07 percent), tea (7.34 percent), georgette (2.11 percent), lawn (1.77 percent), long cloth (1.58 percent), pulse mash (1.57 percent), prepared tea (1.32 percent), and gur (1.03 percent).

On the other hand, the PBS noted a decrease in the prices of chicken (8.14 percent), chilli powder (2.31 percent), LPG (1.31 percent), mustard oil and garlic (1.19 percent) each, pulse gram and onions (1.06 percent) each, vegetable ghee 1kg (0.83 percent), cooking oil 5 litre (0.21 percent), pulse moong (0.17 percent), pulse masoor (0.15 percent) and eggs (0.03 percent)

For the week under review, 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 SPI saw a significant rise primarily due to a 42 percent 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 percent WoW.

“The major reason behind 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.

With the onset of Ramazan, food prices would continue to rise. “We expect March 2023 CPI (consumer price index) to come at 35.5 percent on YoY basis,” Rauf added.

Average price of wheat flour has jumped up 42.32 percent WoW and 120.66 percent YoY to stand at Rs2,586.37/20kg. Compared to last week, the price has jumped up by Rs769.12 from RsRs1,817.25; 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.

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 26 (50.98 percent) items increased, 12 (23.53 percent) items decreased and prices of 13 (25.49 percent) items remained unchanged.

The PBS data attributed the YoY rise in SPI to the jump in the prices of onions (228.28 percent), cigarettes (165.88 percent), wheat flour (120.66 percent), gas charges for Q1 (108.38 percent), diesel (102.84 percent), tea (94.60 percent), bananas (89.84 percent), rice irri-6/9 (81.51 percent), broken basmati rice (81.22 percent), petrol (81.17 percent), eggs (79.56 percent), pulse moong (68.64 percent), potatoes (57.21 percent) and pulse mash (56.46 percent). It also noted a decrease in the prices of chilli powder (9.56 percent).

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 percent.

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 percent respectively.