Weekly inflation at 11.32pc as tomato prices jump 35pc in a week

Short-term inflation in Pakistan stood at 11.32 per cent year on year in the week ending October 29, driven largely by perishable food items, the Pakistan Bureau of Statistics (PBS) said on Friday, as reported by Dawn. The figure is a little lower than the 11.85 per cent of the previous week, and the Sensitive Price Index (SPI) itself slipped 0.35 per cent week on week.

What the weekly index measures

The SPI tracks 51 essential items whose prices are collected from 50 markets in 17 cities. In the latest week, 15 of those items became dearer, 12 became cheaper and 24 were unchanged. Weekly inflation has stayed in double digits for several weeks in a row, which Dawn links mainly to repeated increases in petrol and diesel prices.

What got dearer and what got cheaper

Week on week, the biggest increases were:

• tomatoes, up 34.91 per cent;
• potatoes, up 3.27 per cent;
• diesel, up 2.53 per cent;
• pulse gram, up 2.11 per cent;
• plain bread, up 1.29 per cent;
• onions, up 0.62 per cent; and
• fresh milk, up 0.48 per cent.

Electricity charges for the first quarter fell 3.92 per cent in the week, chicken 2.95 per cent, eggs 2.81 per cent, wheat flour 0.83 per cent, LPG 0.73 per cent and petrol 0.39 per cent.

Compared with a year ago, the picture is harsher. LPG is up 106.86 per cent, electricity for the first quarter 52.38 per cent, diesel 45.13 per cent, petrol 43.61 per cent, wheat flour 34.87 per cent and chicken 31.72 per cent. Mutton is up 14.66 per cent, beef 12.10 per cent and plain bread 12.26 per cent. A few items are cheaper than a year ago: potatoes are down 38.67 per cent, tomatoes 27.99 per cent, eggs 26.70 per cent and sugar 25.21 per cent.

Why prices keep rising

Dawn’s report describes the pressure as cost-push inflation: higher fuel costs raise transport and production costs, which then show up in food prices. It adds that the government has been unwilling to cut the petroleum levy and has continued to raise petrol and diesel prices, which also lifts sales tax collection indirectly because the tax is charged on higher prices. The government has not been quoted on that in the reports we drew on.

Note on the numbers: Dawn’s report says short-term inflation “rose” to 11.32 per cent, but its own figures show the annual rate fell from 11.85 per cent a week earlier and the index fell week on week. We have used the figures.

Background

Our report on the previous week’s SPI reading of 11.85 per cent covers the rise in LPG, chicken and flour prices. Pakistan’s wider inflation outlook has also worsened: see our story on the IMF raising its inflation forecast for Pakistan to 9.9 per cent.

Why it matters

A weekly index is noisy, and one week’s fall does not mean relief for households. The tomato jump will be felt in every kitchen, and a diesel increase carries into the cost of moving all food from farm to market. Because the annual rates for fuel, LPG and electricity are so high, families are paying far more for basics than a year ago even when the week-to-week figure eases. The next fuel price notification and the State Bank’s next inflation reading will show whether the pressure is easing or only pausing.

This article draws on reporting by Dawn.