KARACHI: Inflationary pressures in Pakistan moderated further as the Sensitive Price Indicator (SPI) recorded a year-on-year increase of 1.16% for the week ending January 16, the lowest rate in several months.
On a weekly basis, the SPI fell by 0.39%, reflecting declining prices in key food categories, according to data from the Pakistan Bureau of Statistics (PBS).
Tomatoes led the weekly price declines, plunging 18.31%, followed by potatoes (-10.42%), onions (-10.01%), and eggs (-8.64%). Other notable decreases included chicken (-2.17%), liquefied petroleum gas (-1.21%), and mustard oil (-0.67%).
However, the week saw price hikes for certain commodities. Bananas posted the largest increase, rising by 3.22%, while petrol prices increased by 1.39%. Other significant contributors to inflation included vegetable ghee (up 1.08% for 2.5 kg packaging and 0.74% for 1 kg), cooking oil (+1.01%), firewood (+1.00%), and diesel (+0.99%).
Out of the 51 essential items tracked across 17 cities, prices for 21 items rose, 10 declined, and 20 remained unchanged.
The annual SPI data highlights a complex inflationary picture. Prices of certain items have surged over the past year, with ladies’ sandals topping the list at a 75.09% increase, followed by potatoes (+47.91%), gram pulses (+39.77%), and moong pulses (+33.40%). Similarly, powdered milk and beef prices rose by 25.77% and 22.59%, respectively.
Several essential items witnessed significant year-on-year price reductions, including onions (-47.22%), wheat flour (-35.89%), and eggs (-31.92%). Chillies powder (-20.00%) and tomatoes (-19.83%) also saw considerable declines, offering some relief to consumers.
SPI data revealed varying impacts across income groups. The lowest-income households (earning less than Rs17,732 per month) experienced a 0.20% year-on-year increase in inflation, while the highest-income group (earning above Rs44,175 per month) saw a higher rise of 1.66%.
The easing inflation could influence the State Bank of Pakistan’s (SBP) monetary policy decisions in the coming months. With the SPI showing consistent declines, the central bank may consider revising its policy rate, currently at 13%, to support economic growth.
According to the SBP’s governor, Jameel Ahmad, inflation is expected to decline further in January but may rise later due to base effects and increasing energy prices. He added that inflation is projected to remain within the SBP’s target range of 5-7%.
Brokerage firm Arif Habib Limited’s (AHL) forecast suggests that headline inflation will ease to 3.06% in January, the lowest level in nine years. The consumer price index inflation slowed to 4.1% year-on-year in December, down from 4.9% the previous month.
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