ISLAMABAD: Pakistan continues to face a relentless surge in inflation, which is hitting the poor and middle-income groups particularly hard. The latest data from the Pakistan Bureau of Statistics (PBS) shows that the sensitive price indicator (SPI) rose by 46.82% year-on-year during the week ending April 27.
This represents an increase of 0.15% week-on-week. The rise in prices of potatoes (8.22%), chicken (1.75%), wheat flour (1.55%), gur (1.23%), bread (1.13%), and rice irri-6/9 (1.01%) were the primary drivers of this increase.
The SPI, which is compiled by the PBS, tracks the prices of 51 essential items from 50 markets in 17 cities across the country.
The rise in inflation has been particularly devastating for those on low incomes who are struggling to make ends meet. The government’s failure to keep prices under control has caused a significant decimation of citizens’ purchasing power.
This has further worsened the already dire economic situation in the country, where more than half of the population lives below the poverty line.
Fahad Rauf, head of research at Ismail Iqbal Securities, said that the SPI went up moderately mainly because of an increase in the prices of potatoes and mutton.
The price trend of perishable food items during Eid week has been mixed, with prices of potatoes, chicken, and mutton going up and prices of tomatoes, bananas, and onions going down.
CPI for April 2023 likely to come in around 38% in Pakistan
Ismail Iqbal Securities forecasts that the CPI (consumer price index) for April 2023 is likely to come in around 38%, up from 35.4% in March 2023.
In response to the persistent inflationary pressures and the absence of an International Monetary Fund (IMF) programme, another rate hike cannot be ruled out.
The State Bank of Pakistan (SBP) might look to hold another earlier than scheduled Monetary Policy Committee (MPC) meeting to discuss the issue.
However, another hike in interest rates could further discourage businesses which have already put their expansion plans on hold and capped hiring.
The import restrictions have also increased the woes for industries and businesses that have been facing frequent shutdowns, which means uncertain or no wages for millions of workers.
The prices of 21 out of 51 items (41.17%) increased during the week under review, while the prices of seven items (13.73%) decreased, and the prices of 23 items (45.10%) remained unchanged. The prices of all these commodities went up on a yearly basis.
The weightages assigned to various commodities in the SPI basket indicate that milk, electricity, wheat flour, sugar, firewood, long cloth, and vegetable ghee are the most essential commodities for the lowest quintile of the population.
Of these, the price of milk and wheat flour increased, and sugar decreased, while the prices of electricity, firewood, long cloth, and vegetable ghee remained unchanged.
