ISLAMABAD: The persistent upward trajectory of weekly inflation remains a cause for concern as official data released on Friday indicated a year-on-year increase of 30.82 percent for the week ending on August 10. The surge in inflation has been primarily attributed to a significant rise in electricity charges, exacerbating the financial burden on households.
Measured by the Sensitive Price Index (SPI), short-term inflation saw a week-on-week increase of 0.69 percent, underscoring the ongoing challenges faced by both economists and consumers. With no clear signs of a slowdown, the inflationary pressures continue to mount, casting shadows over economic stability.
One of the contributing factors to the soaring inflation is the 1.75 percent increase in electricity tariffs during the first quarter. Among the 51 items encompassed within the SPI basket, the prices of 29 goods registered a noticeable uptick, while five items experienced a decline and 17 remained unchanged compared to the preceding week.
During the past week, several items witnessed substantial year-on-year price hikes, including wheat flour (131.81 percent), cigarettes (109.57 percent), gas charges for Q1 (108.38 percent), Lipton tea (95.19 percent), rice basmati broken (84.09 percent), chilies powder (72.94 percent), rice irri-6/9 (72.74 percent), sugar (67.90 percent), chicken (65.87 percent), gur (58.93 percent), gents sponge chappal (58.05 percent), potatoes (57.02 percent), and tomatoes (53.66 percent).
Moreover, the most substantial week-on-week price hikes were recorded in chillies powder (3.72 percent), powdered milk (3.65 percent), pulse mash (3.13 percent), garlic (2.39 percent), sugar (2.30 percent), chicken (2.27 percent), salt (1.84 percent), and eggs (1.74 percent).
The recent trend in inflation indicates a reversal in the deceleration that persisted for eight weeks. This shift is mainly attributed to the surge in petroleum prices during July, following a slight drop in June. The continued elevation of the SPI is anticipated, given the persistent high levels of petroleum prices.
Earlier in May, the SPI remained above 45 percent for three consecutive weeks, reaching an all-time high of 48.35 percent on May 4. This concerning trend is influenced by several key factors, including rupee depreciation, rising petrol prices, sales tax, and escalating electricity bills.
According to the latest forecast from the International Monetary Fund (IMF), the average Consumer Price Index (CPI) for the current fiscal year is projected to be 25.9 percent, showing a slight decline from the previous year’s figure of 29.6 percent.
However, some respite was observed on a week-on-week basis with decreases in prices of key commodities such as vegetable ghee (1 kg) by 1.59 percent, LPG by 0.79 percent, cooking oil by 0.78 percent, mustard oil by 0.48 percent, and vegetable ghee (2.5 kg) by 0.10 percent.
The government’s stringent measures, including hikes in fuel and power tariffs, the withdrawal of subsidies, adoption of a market-based exchange rate, and increased taxation, are part of the IMF program aimed at generating revenue to bridge the fiscal deficit. However, these measures may potentially result in sluggish economic growth and continued inflationary pressures in the coming months.
