Power rates take SPI up 0.55pc, eclipse fall in food prices

KARACHI: Hefty increase in electricity tariff pushed weekly inflation up 0.55 percent week-on-week, with year-on-year numbers jumping a whopping 19.49 percent during the seven-day period ended December 16, official data showed on Friday.

Last week, National Electric Power Regulatory Authority (NEPRA) increased electricity charges by Rs4.74 on account of fuel charges adjustment (FCA) for October 2021. This spiked the prices of electricity for Q1 by 10.37 percent WoW and 83.95 percent YoY. Power rates now stand at Rs7.45/unit, up from Rs6.75/unit last week and Rs4.05/unit last year.

Pakistan Bureau of Statistics (PBS) said the rise in sensitive price indicator (SPI) was driven by spike in the prices of electricity for Q1, pulse masoor (4.11 percent), salt (3.70 percent), pulse gram (2.08 percent), bananas (1.69 percent), mustard oil (1.35 percent), pulse mash (1.32 percent), and washing soap (1.23 percent). Joint impact of these commodities was 1.55 percent in overall SPI for the combined group.

PBS data attributes different weightages to the commodities in the sensitive price indicator (SPI) basket. Commodities with the highest weights for the lowest quintile include milk (17.5449 points), electricity (8.3627 points), wheat flour (6.1372 points), sugar (5.1148 points), firewood (5.0183 points), long cloth (4.2221 points), and vegetable ghee (3.2833 points).

Of these commodities, WoW prices of electricity, firewood, and vegetable ghee registered an increase, whereas only sugar and wheat flour declined. However, on YoY basis, all prices went up.

Analyst Fahad Rauf of Ismail Iqbal Securities in his note said that SPI was led by an increase in electricity charges, which overshadowed the fall in food and petroleum prices. “Key decline was witnessed in petrol, chicken, potatoes, and tomato prices,” the note added.

“We expect CPI to come around 12 percent in December 2021 versus 11.5 in November 2021, while low base effect is likely to show peak inflation in January 2022 (12.5-13 percent),” Rauf said.

Firewood price increased Rs7.12 WoW and Rs62.09 YoY to end at Rs784.7/40kg, as gas shortage across the country forced people to resort to the traditional kitchen fuel. Last week the fuel was available for Rs777.58/40kg.

Similarly, price of vegetable ghee has increased by Rs6.93 WoW and Rs359.33 YoY to end at Rs1,005.38/2.5kg tin during the week under review.

During the week, prices of 17 items increased, 15 decreased, while prices of 19 items remained unchanged.

SPI for the groups spending up to Rs17,731; Rs17,732-22,888; Rs22,889-29,517; Rs29,518-44,175; and above Rs44,175 showed a WoW increase of 0.45, 0.98, 0.43, 0.11, and 0.30, respectively. The worst YoY impact was faced by the lowest quintile at 21.42 percent.

Last time YoY SPI was seen around the current range was during the week ended January 23, 2020, a little less than two years ago, when it ended at 19.69 percent.

The YoY trend depicted an increase of 19.49 percent, with prices of electricity for Q1 going up 83.95 percent, LPG moving up 65.26 percent, cooking oil 5 litre up 60.37 percent, vegetable ghee 1kg up 57.56 percent, vegetable ghee 2.5kg up 55.62 percent, mustard oil up 55.60

percent, washing soap up 45.75 percent, petrol up 35.42 percent, chilli powder

up 32.24 percent, pulse masoor up 29.52 percent and diesel going up 26.72 percent.

For the week under review, SPI was recorded at 168.16 points against 167.24 points registered previously.

SPI is computed on weekly basis to assess the price movements of essential commodities at shorter interval of time so as to review the price situation in the country.

It comprises of 51 essential items and the prices are collected from 50 markets in 17 cities of the country.