A day after the central bank expressed its great satisfaction with "disinflation" in the country, the Pakistan Bureau of Statistics (PBS) reported an uptick in prices of essential commodities like food and energy, indicating the return of inflationary pressures for the short term.
PBS reported that the Sensitive Price Indicator (SPI) rose 14.36% in the week ended September 12, 2024 compared to the same week of last year, partially reversing the slowdown seen over the past seven weeks.
Earlier, the SPI reading hit a three-year low at 14.07% year-on-year in the week ended September 5, 2024 after reaching two-year lows in prior weeks.
On a week-on-week basis, the short-term inflation ticked up 0.01% on the back of increase in food and energy prices. It marked the end of deceleration in prices of essential commodities in the preceding four weeks.
The State Bank of Pakistan (SBP) on Thursday noted a faster-than-expected disinflationary trend over the past two months. The delay in planned increase in energy prices and the drop in international oil and food prices fueled the fall in the benchmark Consumer Price Index (CPI)-based inflation into single digit at 9.6% in August.
In this backdrop, the bank aggressively cut its policy rate by 200 basis points to 17.5% – a 20-month low. This brought the total reduction in policy rate to 450 basis points in the past three months, providing cheaper financing to businesses for expanding production and economic activities.
PBS reported that out of the 51 items covered by the SPI, prices of 15 (29.41%) items increased, rates of 14 (27.45%) items decreased and prices of the remaining 22 (43.14%) items stood unchanged compared to the previous week.
The week-on-week increase of 0.01% in the SPI reading was led by a 6.62% rise in prices of tomatoes that reached Rs119.21 per kg compared to Rs111.81/kg in the previous week. It was followed by Q1 electricity charges, which went up 4.13% at Rs6.55/unit compared to Rs6.29/unit in the prior week. Chicken cost 3.77% more at Rs442.15/kg compared to Rs426.08/kg last week. Gram pulse rose 2.43% to Rs390.16/kg compared to Rs380.90/kg earlier.
Garlic price rose 2.24% to Rs552.50/kg compared to Rs540.42/kg in the previous week. Prices of other essential commodities rose up to 1.13%.
The YoY surge of 14.36% in short-term inflation was primarily triggered by Q1 gas charges that soared 570% compared to the same week of last year.
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