Weekly inflation soars due to soar in gas prices

ISLAMABAD: Short-term inflation in Pakistan has witnessed a sharp spike, reaching its third-highest level since May, with a staggering 42 % year-on-year increase in the week ending on November 16. Official data released by the Pakistan Bureau of Statistics on Friday reveals that the Sensitive Price Index (SPI) also surged by 9.95 percent on a week-on-week basis.

According to the data, the substantial increase in inflation is primarily attributed to higher gas prices. Gas prices alone experienced a remarkable surge of 480 % during the week under review, primarily driven by the interim government's decision to raise natural gas prices. Consumers are also set to face an unprecedented surge in fixed monthly charges, going up by 3,900 % for both protected and non-protected consumers.

The average sale price of regasified liquefied natural gas for October saw an increase of over 3.8 % compared to the preceding month for Sui companies. This surge in prices echoes a trend observed in May when the SPI remained above 45 % for three weeks, reaching an all-time high of 48.35 % on May 4. Factors such as rupee depreciation, rising petrol prices, sales tax, and utility bills contributed significantly to that inflationary trend.

While the caretaker government maintained petrol and high-speed diesel prices for the last fortnight, contrary to consumer expectations of a significant reduction, the current week saw a modest reduction in these fuel prices. Despite recommendations from the Oil and Gas Regulation Authority (OGRA) for a notable decline, the interim government opted to keep fuel prices unchanged at high levels.

Among the 51 items in the SPI basket, prices of 25 increased, 13 dropped, and 13 remained unchanged compared to the previous week. Notably, gas charges for Q1 (1108.59 percent), cigarettes (94.46 percent), and wheat flour (86.41 percent) saw the most significant year-on-year increases during the week under review.

The most substantial week-on-week increases were observed in gas prices (480 percent), tea (Lipton) (8.88 percent), pulse masoor (5.28 percent), chicken (3.99 percent), and garlic (3.09 percent), highlighting the pervasive impact on daily essentials.