SPI inches lower albeit wheat flour woes

KARACHI: Weekly inflation eased 0.19 percent as fall in food prices offered some respite during the seven-day period ended September 15, but analysts warn of likely rise in near future with wheat flour prices going sky-high.

Pakistan Bureau of Statistics (PBS) data issued on Friday showed that on an annualised basis, sensitive price indicator (SPI) remained high at 40.58 percent due to a spike in prices of tomatoes (170.51 percent), diesel (105.12 percent), petrol (90.73 percent), pulse masoor (76.65 percent), pulse gram (67.11 percent), mustard oil (65.75 percent), cooking oil 5 litre (65.45 percent), washing soap (61.05 percent), vegetable ghee 2.5kg (60.68 percent), LPG (56.61 percent), vegetable ghee 1kg (56.46 percent), pulse mash (53.41 percent) and electricity for Q1 (52.04 percent).

SPI has declined for the second consecutive week as prices of perishables continued to decline in the markets.

Fahad Rauf, head of research at Ismail Iqbal Securities in his report said that the continuous decline in onion prices has once again provided relief on the inflation front. “It is important to note that wheat prices have increased by 14 percent during the week. Though it is not part of the SPI index, it will impact wheat flour prices in the coming months and raise food inflation,” he said. Consumer price index (CPI) was estimated to stand at 25.4 percent year-on-year by Rauf, “where higher food inflation would largely be offset by electricity FCA relief, which has not been reflected in SPI yet”.

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, prices of milk, wheat flour and firewood increased; sugar and vegetable ghee declined; whereas price of electricity and long cloth did not change. However, prices of all commodities spiked higher on YoY basis except for refined sugar, which shed 19.83 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 30 (58.82 percent) items increased, 10 (19.61 percent) items decreased and prices of 11 (21.57 percent) items remained unchanged. On YoY basis, SPI is still considerably high. PBS data showed that 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 33.03, 38.29, 37.74, 38.10, and 41.81 percent, respectively. On WoW basis the change for the groups was down 0.31, 0.22, 0.16, 0.15, and 0.19 percent, respectively.