| Welcome to Global Village Space

Monday, March 4, 2024

Weekly inflation touches the sky, hitting a 14 year high

Increase in price of petrol and diesel results in all time high weekly inflation based on the SPI

One after another increase in price of petrol and diesel with a motive to satisfy the IMF conditions has resulted in weekly inflation touching the sky as it surged to 3.38 per cent week-on-week and 27.82 per cent year-on-year hitting a 14-year high during the week ended June 16, based on the sensitive price index (SPI).

Read more: Pakistan’s inflation reaches an all time high

As per data issued by the Pakistan Bureau of Statistics (PBS), prices of 71% of the basket of goods in SPI increased. The list of goods that observed increasing prices is extracted from the PBS data and is given below:

  • Diesel —28.9%,
  • Gents sponge chappal — 26.76%,
  • Gents sandal — 15.40%,
  • Chicken — 12.10%,
  • Petrol —11.43%,
  • Potatoes — 6.89%,
  • Electricity charges for Q1 — 6.63%,
  • Cigarettes — 6.27%,
  • Cooked daal — 5.90%,
  • Pulse gram — 5.29%,
  • Cooked beef — 5.19%

It is important to highlight that the combined effect of the increase in prices of these goods was 2.53% in total SPI for the group.

Previously in May, the inflation rate based on the Consumer Price Index (CPI) reached 13.8% on a year-on-year basis which was the highest since January 2020 — due to a surge in prices of non-perishable food items.

As quoted by the Geo News, Ismail Iqbal Securities Head of Research Fahad Rauf in his note stated, “Based on current numbers, we expect June 2022 CPI at 17.6%.” He pointed out that the removal of subsidy on electricity announced under the prime minister’s package was not yet incorporated in SPI readings. “If removal is incorporated, CPI would reach 19% year-on-year.”

Considering the rapid increase in fuel prices, national price monitoring agency shared that hi-speed diesel (HSD) now remains at Rs264.17 per liter, up from Rs204.93per liter last week, and Rs113.57 per liter during the same period last year.

In the meantime, petrol remains at Rs234.71 per liter, up from Rs210.63 per liter last week, and Rs111.68 per liter last year.

Since the imported government came into power, diesel price has risen by 82%, with petrol price up by 56%. During the week ended April 7, 2022, only three days prior to former prime minister Imran Khan lost the vote of no confidence, petrol was Rs150.63 and diesel was Rs144.9.

In the SPI basket, petrol weightage stands at 6.7%, while hi-speed diesel stands at 0.087% for the combined group. Stagnant wages and rapid increase in fuel prices has over-burdened the masses, especially low- and middle-income earners.

Consequently, citizens are protesting in Karachi and attacked a petrol pump near Purani Sabzi Mandi in Central District over the non-supply of petrol. Also, citizens in Larkana protested due to the increase in petrol price. The outraged citizens set fire to tires at Jinnah Bagh Chowk in Larkana according to ARY News.

It is important to mention that SPI is calculated on weekly basis to assess the price variations of essential goods at a shorter time interval to analyze the situation of prices in the country. The basket of goods for SPI consists of 51 essential items and the prices are collected from 50 markets in 17 cities of the country.

During the week, out of 51 goods, prices of 36 (70.59%) items increased, six (11.76%) items decreased, and nine (17.65%) items remained stable.