ISLAMABAD: Short-term inflation, measured by the Sensitive Price Index (SPI), is on the rise for the second week in a row ahead of the upcoming federal budget, official data showed on Friday.

The SPI-based inflation increased by 21.69 per cent year-on-year in the week ending June 6, mainly due to surging prices of vegetables and pulses. It witnessed a 0.45pc week-on-week increase.

According to early reports on the proposed tax measures in the upcoming budget 2024-25, there appears to be a strong emphasis on indirect taxes, particularly sales tax. This is expected to contribute to an increase in inflation in the coming weeks.

Furthermore, the prices of a few vegetables, such as tomatoes and onions, rise each year due to strong demand related to Eidul Azha. The real impact of the decline in petrol price on essential commodities will be neutralised due to the bullish trend in vegetable prices, which will further fuel inflation in the next few weeks.

In March, the decline in SPI came after a consistent 11-week period of inflation above 40pc, which surged from 29pc recorded on Nov 8, 2023. The weekly inflation hit a record 48.35pc year-on-year in early May 2023, but then decelerated as low as 24.4pc in late August 2023 before surging past 40pc during the week ending Nov 16, 2023.

The items whose prices saw the increase week-on-week included onions (33.21pc), tomatoes (15.34pc), bananas (4.93pc), pulse gram (3.69pc), potatoes (2.62pc), chicken (1.84pc), Georgette (1.57pc), gur (1.45pc), pulse mash (1.07pc), lawn (0.66pc), cigarettes (0.41pc) and energy saver (0.38pc).

The items whose prices decreased the most over the previous week included bread (3.02pc), garlic (2pc), petrol (1.74pc), pulse masoor (1.43pc), diesel (1.42pc), rice basmati broken (1.32pc), chillies powder (1.31pc), eggs (0.94pc), wheat flour (0.77pc) and mustard oil (0.46pc).

However, on an annual basis, the items whose prices increased the most included gas charges for Q1 (570pc), onions (100.37pc), chillies powder (57.89pc), garlic (43.40pc), tomatoes (36.23pc), salt powder (31.30pc), shirting (30.52pc), gents sandal (25.01pc), pulse mash (25pc), beef (21.86pc), energy saver (20.53pc) and sugar (19.85pc).

In contrast, the prices of chicken dropped 30pc, followed by wheat flour (28.35pc), bananas (25.69pc), cooking oil 5-litre (17.05pc), vegetable ghee 2.5kg (15.12pc), vegetable ghee 1 kg (14.19pc), mustard oil (9.73pc), eggs (8.73pc) and LPG (5.47pc).

The SPI stood at 309.91 compared to 308.52 the preceding week and 254.67 a year ago.

Published in Dawn, June 8th, 2024