SPI eases by 0.16pc as govt cuts fuel prices

KARACHI: Pakistan’s weekly inflation declined 0.16 percent week-on-week and increased 45.72 percent year-on-year during the seven-day period ended May 18, as the federal government slashed fuel prices by up to 4.2 percent.

The Pakistan Bureau of Statistics (PBS) in its data issued on Friday, attributed the decline in the sensitive price indicator (SPI) to the drop in prices of food prices, including onions (9.04 percent), garlic (1.76 percent), sugar (1.42 percent), wheat flour (1.40 percent), vegetable ghee 2.5kg (0.63 percent), mustard oil (0.48 percent), pulse masoor (0.40 percent), pulse gram (0.12 percent) and vegetable ghee 1kg (0.11 percent), and non-food items, diesel (10.38 percent), petrol (4.24 percent), LPG (3.02 percent) and firewood (0.89 percent).

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 23 (45.10 percent) items increased, 13 (25.49 percent) items decreased and prices of 15 (29.41 percent) items remained unchanged.

All commodities are assigned different weightages by the PBS. Commodities with the highest weightage for the lowest quintile include milk (17.5449 percent), electricity (8.3627 percent), wheat flour (6.1372 percent), sugar (5.1148 percent), firewood (5.0183 percent), long cloth (4.2221 percent), and vegetable ghee (3.2833 percent).

For the week under review, prices of wheat flour, sugar, firewood, and vegetable ghee decline; electricity and long cloth remained the same; whereas only the price of milk went up.

Fahad Rauf, head of research at Ismail Iqbal Securities said that SPI eased because of the cut in fuel prices. The government decreased the price of petrol and diesel by Rs12 and Rs30 per litre, respectively, mainly due to the decline in international crude oil and gasoline prices.

On the other hand, chicken prices have continued to rise, and are up by 7.5 percent WoW. “We expect May 2023 CPI (consumer price index) to come around 38 percent YoY vs 36.4 percent in April 2023,” Rauf noted.

Wheat flour, that holds 6.1372 percent weight in the SPI basket declined after three weeks to stand at Rs2,718.58/20kg bag, down from last week’s Rs2,757.32/bag. On YoY basis, the price of a wheat flour bag went up by Rs1,293.55 or 90.77 percent.

Five years ago, during the week ended May 16, 2019, the price of a 10kg wheat flour bag was Rs397, as per PBS data. This means that 20kg was available for Rs794/20kg, this shows a hike of 242 percent in five years.

Shakeela, who works as a cook in various houses and falls in the lowest spending quintile, said that making ends meet has become impossible. “After spending on food, my family is not left with enough to care for any healthcare needs. I have started paying utility bills alternatively. If I pay for gas, I am not left with enough to pay for electricity,” she said, lamenting that this means she also has to face penalties from the utility companies or resort to using a kunda.

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 41.67, 45.37, 44.75, 44.72, and 47.99 percent respectively.