ISLAMABAD: According to data from the Pakistan Bureau of Statistics (PBS), the weekly inflation rate, as measured by the Sensitive Price Index (SPI), for the combined income group for the week ending May 4, rose to a record-breaking 48.35% YoY. This represents an increase from the previous week’s high of 47.23%. The PBS data revealed that short-term inflation rose by 1.05% WoW, with prices increasing for essential items such as chicken, potatoes, powdered milk, pulses, eggs, mutton, and bread, as well as non-food items such as footwear and soaps.
The prices of 30 items increased, nine decreased, and 12 remained unchanged during the week under review. The year-on-year SPI has been steadily increasing since August last year and has mostly remained above 40%. It rose to 42.31% on August 18 last year, followed by 45.5% on September 1 that year and 46.65% during the week ending March 22 before hitting an all-time high of 47.23% for the week ending April 19 this year.
The SPI has been rising since the start of Ramazan due to a record rupee devaluation, costly petrol prices, a hike in sales tax, and higher electricity charges. One of the factors for the increase in prices of perishable products is higher transportation charges. To tame inflation, the government has increased interest rates to 21%, which is a record level in the country’s history. However, the government has yet to unlock the International Monetary Fund (IMF) programme despite taking all inflationary and austerity measures.
The government has been implementing strict measures such as hikes in fuel and power tariffs, withdrawal of subsidies, market-based exchange rates, and higher taxation under the IMF programme to generate revenue for bridging the fiscal deficit. However, this may result in slow economic growth and higher inflation in the coming months. The increase in the State Bank of Pakistan (SBP) policy rate, sales tax on most items, and 25% on more than 800 imported food and non-food items will further increase the retail prices of consumer goods.
The data also showed a significant YoY rise in wheat flour, cigarettes, potatoes, gas charges for Q1, and Lipton tea prices. On the other hand, there was a fall in YoY tomato and onion prices, while the prices of gents sponge slippers, gents sandals, and ladies’ sandals rose significantly WoW. Conversely, there was a decline in onion, garlic, and tomato prices WoW, while diesel and mustard oil prices rose slightly.
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In conclusion, the significant rise in inflation rates poses a significant challenge for the Pakistani government. The government needs to implement measures to address inflationary pressures to maintain economic stability and ensure that the cost of living for the average Pakistani does not become unaffordable.
