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Thursday, February 15, 2024

Weekly inflation making new records!

Soaring vegetable prices as a result of crop damage from heavy rains and floods, as well as a significant rise in electricity bills, have all led to increased prices.

Flash floods have caused havoc in different areas of Pakistan, taking lives, shelters and destroying infrastructure, livestock, and crops. Supply-chain disruptions resulted in high prices of perishable items, leading weekly inflation to a record 45.5 percent on annual basis with week-on-week number up 1.31 percent during the seven-day period ended September 1, according to the Pakistan Bureau of Statistics (PBS).

The SPI monitors the prices of 51 essential items based on a survey of 50 markets in 17 cities across the country. During the week under review, the prices of 31 out of 51 items increased, three decreased, and 17 remained stable.

PBS report ascribed the rise in SPI on year-on-year basis to the rise in prices of food items, onions (42.17%), tomatoes (13.25%), pulse moong (7.94%), potatoes (6.97%), eggs (3.84%), chicken (3.25%), pulse gram (2.89%), wheat flour (1.49%), pulse mash (1.26%) and bread (1.22%). As for non-food items, LPG (4.45%), diesel (1.19%) and petrol (0.88%).

Soaring vegetable prices as a result of crop damage from heavy rains and floods, as well as a significant rise in electricity bills, have all led to increased prices. Damage to standing crops will drive up vegetable prices in the following weeks and severe food shortages are also expected in coming days.

Read more: Flash floods and food shortages: issuing import permits for onions and tomatoes

The government has waived duties and taxes on tomato and onion imports. The duty and tax relief will be close to Rs10 per kg, with negligible impact on tomatoes. However, imports of these products will pick up in the coming days.

Prior to this, the highest ever year-on-year increase in weekly inflation, measured by PBS’s Sensitive Price Index, was 44.58 percent, recorded for the week ending on August 25 and 42.31pc in the week ending on August 18.

Pakistan’s consumer price index (CPI) inflation reached a 47-year high of 27.3 percent in August 2022, the highest level since May 1975, with the full impact of catastrophic flooding on food and other commodity prices still to come.

Head of research at Ismail Iqbal Securities Fahad Rauf said the hike was mainly due to massive increase in onion prices. “Increase in Tomatoes and onions is lower than feared. Seems like supply has improved. In Khi [Karachi], imported tomatoes have arrived.”

PTI also shared the update on its Twitter handle stating, “imported government is breaking records of inflation!”

When the PTI’s Imran Khan took office as Prime Minister in August 2018, the YoY SPI was 4.18 percent (week ended August 16, 2018). On April 11, 2022, Shahbaz Sharif took office with the YoY SPI at 17.87 percent. In less than five months, annualized SPI has more than doubled.