ISLAMABAD: The short-term inflation witnessed a year-on-year increase of 29.16 per cent for the week ending on July 20 mainly due to a sharp increase in the retail price of sugar across the country, showed the official data released on Friday.

According to the PBS, the highest recorded retail price of sugar, reaching Rs160 per kg, was observed in Islamabad, followed by Rs152 in Quetta and Rs150 in Rawalpindi, Lahore, Peshawar, and Khuzdar. The average price stood at Rs145 per kg in other cities of the country.

The short-term inflation, measured by the Sensitive Price Index (SPI), remained elevated. However, in the last eight weeks, it slightly decelerated, which can be attributed to a small drop in petroleum prices.

In May, the SPI stayed above 45pc for three weeks after hitting an all-time high at 48.35pc on May 4.

On a week-on-week basis, SPI eased 0.07pc.

The depreciation of the rupee, rising petrol prices, an increase in sales tax and higher electricity bills are among the key contributors to this inflationary trend.

According to the latest IMF forecast, the average Consumer Price Index (CPI) for FY24 is projected to be 25.9pc, a notable decrease from the previous year’s 29.6pc.

However, it’s worth noting that the inflation is expected to dip below 20pc only in the fourth quarter of FY24.

Over the past two years, Pakistan witnessed a consistent increase in inflation rates. However, from June onwards there are expectations of deceleration due to base effects and reduced contributions from food items.

Despite this positive outlook, price pressures are still expected to remain high, mainly due to the delayed implementation of monetary tightening and elevated inflation expectations.

Of the 51 items in the SPI basket, prices of 30 goods soared, nine dropped and 12 remained unchanged compared to the previous week.

During the week under review, the items whose prices increased the most over the same week a year ago were: wheat flour (126.82pc), cigarettes (110.75pc), gas charges for Q1 (108.38pc), tea Lipton (98.99pc), rice basmati broken (79.37pc), rice irri-6/9 (74.14pc), sugar (66.18pc), potatoes (60.32pc), gents sponge chappal (58.05pc), tomatoes (57.58pc), gur (54.21pc), salt powdered (53.83pc) and bread (46.93pc).

On a week-on-week basis, the biggest rise was observed in the prices of tomatoes (36.06pc), chillies powder (20.17pc), sugar (4.77pc), eggs (4.70pc), gur (3.66pc), shirting (2.64pc) and garlic (2.31pc).

Meanwhile, a decrease was also observed on a week-on-week basis in prices of onions (10.29pc), chicken (8.57pc), bananas (8.34pc), wheat flour (0.98pc), vegetable ghee 1 kg (0.49pc), vegetable ghee 2.5 kg (0.39pc), cooking oil 5 litre (0.30pc), petrol (3.40pc) and diesel (2.64pc).

The government has been taking harsh measures — hikes in fuel and power tariffs, withdrawal of subsidies, market-based exchange rate and higher taxation — under the IMF programme to generate revenue for bridging the fiscal deficit, which may result in slow economic growth and higher inflation in coming months.

Published in Dawn, July 22nd, 2023