close
Thursday January 23, 2025

Weekly inflation falls to three-year low on food, fuel prices

By Israr Khan
September 07, 2024
A shopkeeper uses a calculator while selling spices and grocery items along a shop in Karachi on June 11, 2021. — Reuters
A shopkeeper uses a calculator while selling spices and grocery items along a shop in Karachi on June 11, 2021. — Reuters

ISLAMABAD: Weekly inflation fell to a three-year low of 14.07 per cent year-on-year in the first week of September, driven by declining food and fuel prices, according to official data released on Friday.

The Sensitive Price Indicator (SPI) declined 0.15 per cent from the previous week, the Pakistan Bureau of Statistics (PBS) said. This marked the lowest level since October 2021, after weekly inflation peaked at 48.35 per cent in May 2023.

The SPI has remained in double digits since February 2020, tracking prices of essential items like food and household necessities. Of the 51 items monitored across 50 markets in 17 cities, the prices of 19 items rose, 13 decreased, and 19 remained unchanged compared with the previous week. The biggest price drops were seen in tomatoes, down 14.5 per cent to Rs112 per kilogram, and wheat flour, down 1.3 per cent to Rs1,761 for a 20-kilogram bag. Diesel prices dropped by 1.2 per cent, while petrol was down 0.68 per cent. Masoor pulse price declined 0.6 per cent, sugar 0.54 per cent, mash pulse by 0.5 per cent and cooking oil (5-litre pack) was down by 0.41 pervcent over the previous week. In contrast, onion prices increased by 3.8 pervcent to Rs151 per kilogram, gram pulse 1.65 per cent to Rs381/kg, garlic rose 1.4 per cent Rs540/kg and LPG by 0.9 per cent to Rs3,117/11.6kg cylinder. Likewise, cooked daal and cooked beef price increased by 0.7 per cent each, eggs 0.54 per cent, potatoes 0.5 per cent and rice basmati broken price increased by 0.34 per cent.

For households earning less than Rs17,732 per month, inflation decreased 0.14 per cent for the week, while the highest income group, earning more than Rs44,175 monthly, saw a drop of 0.15 per cent. On a yearly basis, the SPI rose 8.79 per cent for the lowest income group and 13.1 per cent for the highest income group.

Pakistan’s broader Consumer Price Index (CPI) fell to a 34-month low of 9.6 per cent in August 2024. This is the first-time inflation has dropped to single digit since October 2021.Core inflation, which excludes food and energy costs, dropped to 10.2 per cent in August from 18.4 per cent in the same month last year. The August reading of core inflation is at a 28-month low. The State Bank of Pakistan is expected to cut its key interest rate in its Sept 12 meeting, with analysts predicting a reduction of at least 150 basis points from the current 19.5 per cent. Economists say more cuts may be needed, as the real interest rate -- the current interest rate minus inflation -- stands at 9.9 per cent.High real interest rates have raised concerns about debt sustainability, as they increase borrowing costs and strain public finances in a country with a significant debt burden.