Rising Food Prices Propel Pakistan’s Weekly Inflation to a 7-Month High: Navigating Economic Challenges
Inflation has surged to a seven-month high in Pakistan, driven by a combination of factors, including a depreciating currency and escalating energy expenses. Official data released on Friday by the Pakistan Bureau of Statistics (PBS) reveals that the Sensitive Price Indicator (SPI), monitoring prices of 51 essential items, recorded a 1.36 percent increase for the week ending January 11. On a year-on-year basis, SPI inflation skyrocketed to 44.16 percent, marking the highest level since May 2023. In the preceding week ending January 4, the SPI had stood at 42.86 percent. This marks the ninth consecutive week with the SPI above 40 percent, signifying persistent inflationary pressures on the economy.
The primary catalyst behind this inflationary surge is the sharp rise in food prices, particularly affecting essential items such as tomatoes, onions, chicken, eggs, and pulses, which witnessed double-digit price hikes. Additionally, consumers faced higher expenses in electricity charges, LPG cylinder prices, and the cost of matchboxes. Analysis of the data from the Pakistan Bureau of Statistics reveals a mixed trend in food prices, with some commodities experiencing reductions while others saw increases. The impact of these price fluctuations also varied among income groups, with SPI inflation recorded at 36.06 percent for individuals in the lowest income bracket (earning up to Rs17,732 per month) and reaching 42.71 percent for those with higher incomes (spending more than Rs44,175 per month). Among the 51 items monitored by SPI for price changes, 21 items (41.18 percent) witnessed price increases, eight items (15.68 percent) recorded decreases, while prices of 22 items (43.14 percent) remained stable.
Throughout the week, significant price hikes were observed across various commodities in Pakistan. Tomatoes saw an increase of 15.6 percent, reaching Rs144/kg, while onions rose by 8.9 percent, reaching Rs211/kg. The price of chicken farm (live) surged by 6.4 percent to Rs436/kg, and electricity charges for Q1 increased by 5.1 percent to Rs7.4/unit. Eggs on farms saw a price hike of 4.3 percent, reaching Rs417/dozen, and matchbox prices increased by 2.56 percent, reaching Rs6/box. Additionally, gur prices rose by 2.3 percent to Rs208/kg, and the cost of an 11.67kg LPG cylinder increased by 2.3 percent to Rs3355. Other notable increases include gram pulse by 2.1 percent to Rs258/kg, energy saver by 1.4 percent to Rs354, mash pulse by 0.8 percent to Rs536/kg, and rice IRRI-6/9 by 0.67 percent to Rs167/kg. In contrast, prices decreased for items such as mustard oil (down by 7.1 percent), onions (down by 6.7 percent), vegetable ghee 1-KG (down by 1.7 percent), and bananas (down by 1.5 percent) on a year-on-year basis.
In summary, Pakistan is facing a challenging economic scenario marked by its highest inflation rate in seven months. The surge is primarily attributed to rising food prices, particularly impacting essential commodities, alongside increasing energy costs. The mixed trend in food prices adds complexity to the situation, with different income groups experiencing varying degrees of inflation. To address these economic challenges effectively, Pakistan will need to implement measures aimed at price stabilization and inflation management.
