Petrol, food price surges nudge SPI up 0.78pc

KARACHI: Pakistan’s sensitive price indicator (SPI) inflation continued to rise during the week ended August 17, 2023 with the biggest push coming from surge in prices of petrol, rice and sugar.

The Pakistan Bureau of Statistics (PBS) data published on Friday showed that weekly inflation increased 0.78 percent, whereas the annual number went up 27.57 percent, easing slightly from last week’s 30.82 percent.

The PBS attributed the increase in SPI to rising prices of chilli powder (7.58 percent), rice irri-6/9 (7.48 percent), diesel (7.29 percent), petrol (6.40 percent), garlic (5.06 percent), sugar (4.02 percent), gur (3.23 percent), broken basmati rice (3.06 percent), chicken (2.83 percent), and bananas (2.72 percent)

On the other hand decrease was observed in the prices of tomatoes (13.60 percent), cooking oil 5 litre (1.65 percent), vegetable ghee 2.5kg (0.85 percent), vegetable ghee 1kg (0.43 percent), firewood (0.42 percent), mustard oil (0.23 percent), and wheat flour (0.19 percent).

For the week under review, SPI was recorded at 275.57 points against 273.43 points registered last week and 216.02 points recorded during the week ended August 18, 2022.

Fahad Rauf, head of research at Ismail Iqbal Securities, said the increase was mainly on account of petroleum prices, but it is important to note that the price of some key food items like rice and sugar also increased. Some of which can be linked to the rise in international prices.

“CPI (consumer price index) is expected to fall in August due to high base effect. However, inflation continues to rise on monthly basis. Moreover, given recent rupee depreciation, more inflationary pressures could build,” Rauf added.

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 32 (62.75 percent) items increased, 7 (13.72 percent) items decreased and prices of 12 (23.53 percent) 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 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).

Of these commodities, the price of milk and sugar increased; wheat flour, and vegetable ghee decreased; whereas prices of long cloth, and electricity remained unchanged.

Rising inflation has added considerably to the wealth gap, with the brunt of the impact being felt by the working classes. Food is going out of reach for those receiving minimum or even lower wages in the informal sector.

As per PBS archives, a wheat flour bag was priced at Rs385.73/10kg (Rs771.46/20kg) during the week ended August 16, 2018, and a person earning Rs15,000 minimum wage spent 5 percent of their income on the essential commodity. Currently, at Rs32,000/month, a person is spending 9 percent of their minimum wage on just buying a 20kg bag of wheat flour, which is being sold for Rs2,824.73 on average.

Similarly, the spending on cooking oil has also increased from 6 percent of minimum wage in August 2018 to 9 percent of minimum wage in 2023. The price of cooking oil was Rs960/5 litres back in August 2018, which now stands at Rs3,019.66/5 litres.

On YoY basis, PBS recorded an increase of 27.57 percent in SPI on account of rising prices of wheat flour (131.29 percent), gas charges for Q1 (108.38 percent), cigarettes (106.89 percent), tea (95.19 percent), broken basmati rice (88.76 percent), chilli powder (86.05 percent), rice irri-6/9 (84.16 percent), sugar (74.71 percent), gur (63.00 percent), chicken (58.56 percent), gents sponge chappal (58.05 percent), potatoes (56.30 percent) and salt (49.09 percent).

A decrease was observed in the prices of onions (28.85 percent), electricity for Q1 (21.96 percent), pulse masoor (14.85 percent) and vegetable ghee 1kg (1.20 percent).

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 27.79, 25.20, 29.55, 30.82, and 28.48 percent respectively.