Up 44.58pc year-on-year: High prices of perishables, staples keep SPI at over decade high

KARACHI: Weekly inflation surged 1.83 percent week-on-week and 44.58 percent year-on-year during the week ended August 25, as prices of perishables spiked in the wake of supply chain disruptions caused by heavy rains across the country.

Pakistan Bureau of Statistics (PBS) data released on Friday attributed the YoY increase in sensitive price indicator (SPI) to the hike in prices of tomatoes (178.10 percent), onions (155.14 percent), diesel (108.77 percent), petrol (94.53 percent), pulse masoor (90.74 percent), cooking oil 5 litre (70.61 percent), mustard oil (67.58 percent), vegetable ghee 2.5kg (64.71 percent), vegetable ghee 1kg (63.93 percent), washing soap (63.27 percent), electricity for Q1 (63.03 percent), chicken (55.76 percent) and pulse gram (55.07 percent).

Fahad Rauf, head of research at Ismail Iqbal Securities, said, “Floods led supply chain issue and crop damage is the major reason behind rising food inflation. We expect inflationary pressure to continue due to impact of floods and energy price adjustments. CPI is expected to come in the range of 26-27 percent over next few months.”

SPI inflation has been on an upward trajectory. When PTI’s Imran Khan assumed the prime minister’s office in August 2018, YoY SPI stood at 4.18 percent (week ended August 16, 2018). Shahbaz Sharif took office on April 11, 2022, when YoY SPI stood at 17.87 percent. It has more than doubled since then.

Former federal minister for finance and revenue Shaukat Tarin, lamenting the steep rise in SPI because of increase in prices of tomatoes, onions and dal, as well as petroleum and electricity rates, said this “has turned the life of the common man into hell”.

Tomatoes and onions, a part of almost every household dish shot up more than 40 percent, with average prices standing at Rs157.46 and Rs122.16 per kg, respectively. During the same week last year, tomato was available for Rs56.62/kg, while onion was sold for Rs47.88/kg. PBS showed that the perishable commodity was sold for up to Rs240/kg in Karachi.

A vegetable vendor from North Nazimabad, willing to only share his first name Majid, said people fight with him about rising prices of fresh commodities, “but it is not in my hand”. He blamed the devastating rains for increasing prices as well as the government.

“Rains have swept away crops and roads are broken everywhere; we can even see it on social media, perishables are not only pricey, but are coming damaged to the sabzi mandi and ahead,” he explained, asking how can people blame him for the price hike. He shared that his own electricity bill came at Rs15,000 for August when usually his bill stands at around Rs6,000-8,000.

The massive increase in SPI has impacted all expenditure groups; divided in five quintiles by the PBS. 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 37.54, 43.51, 41.97, 41.9, and 45.28 percent, respectively. On WoW basis the change for the groups was 2.66, 2.44, 2.16, 2.00, and 1.53 percent, respectively.

Topline Securities in its note said that the increase in SPI was “over a decade high”. On WoW basis, PBS pegged the spike in SPI to the rise in prices of tomatoes (43.09 percent), onions (41.13 percent), potatoes (6.32 percent), eggs (3.43 percent), cigarettes (2.26 percent), garlic (2.23 percent), LPG (1.95 percent), powdered milk (1.53 percent) and pulse mash (1.12 percent).

SPI comprises of 51 essential items collected from 50 markets in 17 cities of the country. During the week, out of 51 items, prices of 23 (45.10 percent) items increased, 7 (13.72 percent) items decreased, and 21 (41.18 percent) items remained stable.