Karachi: The all-time high price of wheat flour has caused weekly inflation to rise by 1.80% week-on-week and 46.65% year-on-year for the seven-day period that ended on March 23, 2023, indicating even more difficult times ahead.
According to The News report on Saturday, the surge in the sensitive price indicator (SPI) was attributed to the increase in prices of various items such as tomatoes, wheat flour, potatoes, bananas, tea, georgette, lawn, long cloth, pulse mash, prepared tea, and gur, as per Pakistan Bureau of Statistics (PBS) data issued on Friday.
Meanwhile, the prices of chicken, chilli powder, LPG, mustard oil, garlic, pulse gram, onions, vegetable ghee 1kg, cooking oil 5 litres, pulse moong, pulse masoor, and eggs have decreased. The SPI for the week was recorded at 250.66 points, compared to 246.22 points last week and 170.92 points during the week ended March 24, 2022.
In his weekly note, Fahad Rauf, head of research at Ismail Iqbal Securities, highlighted that the SPI witnessed a significant rise, mainly driven by a 42% increase in the price of a 20kg bag of wheat flour, which has now hit an all-time high of Rs2,586.
Conversely, chicken prices have declined by 8% week-on-week. Rauf explained that the change in subsidy mechanism from general subsidy to targeted subsidy through BISP [Benazir Income Support Programme] is the primary reason behind the increase in wheat prices. He also warned that with the onset of Ramadan, food prices would continue to surge, and he expects the CPI [consumer price index] for March 2023 to be 35.5% on a year-on-year basis.
The cost of wheat flour has surged by 42.32% WoW and 120.66% YoY, reaching an average of Rs2,586.37 for a 20kg bag. The Pakistan Bureau of Statistics (PBS) reports that Quetta residents are paying the highest prices, at Rs2,889.99 for a 20kg bag of wheat flour.
The SPI, which is calculated by tracking prices of 51 essential items in 50 markets across 17 cities, rose due to increases in the prices of onions, cigarettes, wheat flour, gas charges, diesel, tea, bananas, rice, broken basmati rice, petrol, eggs, pulse moong, potatoes, and pulse mash. During the week, 50.98% of the items surveyed had price increases, 23.53% decreased, and 25.49% remained unchanged.
Inflationary pressures, in conjunction with the halted IMF program, led to a 300-basis-point increase in the State Bank of Pakistan’s (SBP) benchmark interest rate. The SBP is expected to increase the policy rate to 21% during its monetary policy committee meeting on April 4. The YoY SPI rose by 43.62% for those who spend up to Rs17,732, while it increased by 48.35% for those who spend above Rs44,175, indicating an expansion in poverty.