ISLAMABAD, June 9: Despite a significant decline in the prices of petroleum products at the start of the month, weekly based inflation increased for the week ending on June 7, 2012, mainly due to the speculative impact of federal budget.

The increase in prices had been witnessed mostly in kitchen related items and as a result the key sufferers of inflationary impact were the lowest income group earning up to Rs8,000 per month, with a massive jack of 0.31 per cent against the previous week.According to the Pakistan Bureau of Statistics, the Sensitive Price Index (SPI) increased by 0.17 per cent for the combined income group.

For the lower middle class earning Rs8,001 to Rs12,000 per month SPI inflation increased by 0.29 per cent during the said week compared to the previous one.

For the mid level earning between Rs12,001 and Rs18,000 per month the SPI increased by 0.26 per cent, and it further declined as the income level improved.

The inflation for upper-middle class earning between Rs18,001 and Rs35,000 in the week under review was 0.20 per cent, whereas there has been almost negligible impact of inflationary pressure on the high end income group earning more than Rs35,000 per month as the SPI inched up by 0.06 per cent for this class during the week ending on June 07.

“The main reason for almost double impact for the low income group is that they spend a major chunk of their income on food,” said an economist at the Planning Commission, adding, “However there is no technical reason for the overall inflation during the week. It was an administrative issue not an economic debate.”

It seems that following the age old tradition, market forces’ increased the prices after the budget even though no new tax was introduced in the budget.

The SPI is computed from 17 urban centres at 53 essential items for five income groups covering. Of the 53 essential items, 24 registered an increase in prices including LPG, farm live chicken, tomatoes, sugar, plain bread, onions, packed cooking oil, gur, irri-6 rice, packed vegetable ghee, fresh milk, curd, cooked beef plate, rice basmati broken, potatoes, washed mash pulse, beef, tea prepared, mutton, loose red chilies powder, wheat, long cloth, shirting and cigarettes.

Eleven items registered price decrease which includes petrol, bananas, kerosene oil, farm chicken eggs, washed gram pulse, diesel, garlic, loose vegetable ghee, washed moong pulse, mustard oil and wheat flour.

The prices of 18 items remained stable. The list includes powdered milk, washed masoor pulse, loose salt powdered, tea, cooked dal plate, lawn cloth, georgette cloth, gents sandal, chappal gents, ladies sandal, electric charges, gas charges, firewood, energy saver bulb, washing soap, match box, local telephone calls and bath soap.

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