Marginal Decline in Weekly Inflation

KARACHI: Pakistan’s short-term inflation, as measured by the Sensitive Price Indicator (SPI), recorded a slight decline of 0.26% for the week ending January 2, 2025, according to data released by the Pakistan Bureau of Statistics (PBS) on Friday.

Year-on-Year Inflation and Food Price Trends

Despite the weekly dip, year-on-year inflation for the same period rose by 3.97%, highlighting ongoing price pressures. Among food items, notable price decreases included:

  • Tomatoes: Down by 13.48%
  • Electricity Charges for Q1: Reduced by 7.48%
  • Potatoes: Fell by 5.59%
  • Pulses (Gram and Mash): Marginal declines of -0.34% and -0.05%, respectively.

Other essential commodities also showed slight price reductions, such as eggs (-0.23%), garlic (-0.21%), LPG (-0.18%), and wheat flour (-0.09%).

Price Hikes in Key Commodities

Conversely, some items experienced significant price increases:

  • Chicken: Rose sharply by 10.28% (highest weekly increase).
  • Onions: Up by 4.93%.
  • Bananas: Increased by 1.68%.
  • Diesel: Rose by 1.18%.

Other notable hikes were observed in sugar (0.95%), pulse moong (1.08%), and vegetable ghee (up 0.53% for 2.5kg packs and 0.28% for 1kg packs).

Breakdown of Monitored Items

Out of 51 essential commodities:

  • Prices increased for 18 items (35.29%).
  • Prices decreased for 10 items (19.61%).
  • Prices remained stable for 23 items (45.1%).

Year-on-Year Inflation Contributors

Over the year, the highest inflation contributors were:

  • Tomatoes: Up by 77.84%.
  • Potatoes: Increased by 66.63%.
  • Pulse Gram: Rose by 47.53%.
  • Ladies’ Sandals: Surged by 75.09%.

Meanwhile, significant relief was observed in wheat flour (-36.12%), onions (-29.95%), and eggs (-15.78%).

Impact Across Income Groups

The inflationary impact varied across income brackets:

  • Lowest income group (monthly income up to Rs17,732): Experienced a 0.51% weekly decrease.
  • Highest income group (monthly income above Rs44,175): Noted a modest 0.10% decline.

Broader Inflation Trends

The PBS data reflects mixed trends influenced by seasonal factors, supply chain dynamics, and government policy measures aimed at stabilizing prices.

On a broader scale, Pakistan’s inflation rate in December 2024 cooled to 4.07%, down from 4.86% in November and a dramatic drop from 29.66% a year earlier. This represents the lowest inflation rate in nearly seven years and the fifth consecutive month of single-digit inflation, a milestone last seen in early 2021.

For the first half of FY2024-25 (July-December), average inflation plummeted to 7.22%, a stark contrast to 28.79% in the same period the previous year.

Key Drivers of Declining Inflation

Economists attribute the inflation cooldown to:

  • Stabilized commodity markets.
  • Improved supply chains.
  • A relatively steady rupee.
  • The “base effect” from last year’s high inflation rates.

Conclusion

While short-term inflation eased slightly, the year-on-year rise in essential commodity prices indicates persistent challenges for households. The marked reduction in overall inflation reflects progress, yet efforts must continue to stabilize prices and ensure affordable access to basic necessities for all income groups.

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