Inflation records highest-ever weekly spike

 

ISLAMABAD: Inflation measured by the Sensitive Price Index (SPI) increased by 3.68 per cent from the previous week mainly due to the highest-ever increase in food prices, according to the Pakistan Bureau of Statistics (PBS) data released on Friday. 

The increase in the weekly inflation is the highest since the change of the base year. On June 17, the second highest increase in SPI was recorded at 3.38pc. The SPI recorded a highest-ever year-on-year increase of 37.67pc in the week under review. 

The government increased petrol and diesel prices massively which also contributed to an increase in food inflation. 

The recent rains across the country have also caused damage to the standing crops as a result of which vegetables prices are likely to be stayed on the higher side amid short supplies. The massive increase in electricity tariff is another factor that contributed to the price spike. The government has already announced in the budget that it will revive sales tax on petroleum products as well as impose a petroleum development levy in a phased manner. 

As a result, the price of diesel is expected to increase for next quarter. This will further increase food prices because of high transportation charges. 

The government projected a modest inflationary annual target of 11.5pc for FY23 in the budget documents. However, the Federal Board of Revenue, which uses inflation as one of the measures to gather extra tax from consumers, has projected inflation at 12.8pc. Independent economists projected that annual inflation would be in the range of 25pc to 30pc. 

Soon after coming into power, the new government disbanded the dedicated National Price Monitoring Committee, which was led by the finance minister, while provinces were represented by provincial chief secretaries. The committee meets every Monday to monitor the prices of essential food commodities.