According to the economic survey of Pakistan Inflation is a key economic indicator that offers important insight into the general cost of living and price movements. Price stability is essential for all kinds of economic decision-making that leads not only to economic growth but also uplifts the poor and fixed-income citizens who are the most vulnerable segment of the society.
| Week Over Previous Week (WoW) (28.12.2023 Over 21.12.2023) Showing 0.37pc Change | |||||
|---|---|---|---|---|---|
| (Major) Increased Items (percentage) Food Items | |||||
| Food Items | Per cent | Food Items | Per cent | Non Food Items | Per cent |
| Onions | 15.21 | Sugar | 1.35 | Firewood | 0.31 |
| Chicken | 4.76 | Bananas | 1.05 | LPG | 0.21 |
| Pulse Moong | 2.90 | Pulse Masoor | 0.78 | ||
| Pulse Gram | 2.89 | Pulse Mash | 0.54 | ||
| (Major) Decreased Items (percentage) | |||||
| Food Items | Per cent | Food Items | Per cent | Non Food Items | Per cent |
| Potatoes | -8.66 | Eggs | -0.40 | Nil | |
| Tomatoes | -1.01 | Mustard Oil | -0.24 | ||
| Vegetable Ghee 2.5 kg | -0.61 | Gur | -0.19 | ||
| Cooking Oil 5 Litre | -0.44 | Garlic | -0.15 | ||
| Source: PBS | |||||
For a developing country like Pakistan, a stable inflation environment is necessary to ensure productive investments and savings to attain sustainable and inclusive growth.
For FY2022, the inflation target was set at 8.0 per cent, but an abnormal increase in global commodity prices mainly crude oil and edible oil has soared domestic prices since Pakistan is a net importer of these essential items. It is the 6th consecutive month the inflation rate has remained in double digits.
According to the Pakistan Bureau of Statistics, the Sensitive Price Indicator (SPI) is computed on a weekly basis to assess the price movement of essential commodities at shorter intervals of time so as to review the price situation in Pakistan. SPI comprises 51 essential items collected from 50 markets in 17 cities of the country. The SPI for the current week closed on 28th December 2023 increased by 0.37 per cent. The major increase is observed in the prices of onions (15.21 per cent), chicken (4.76 per cent), pulse moong (2.90 per cent), pulse gram (2.89 per cent), sugar (1.35 per cent), bananas (1.05 per cent), pulse masoor (0.78 per cent) and pulse mash (0.54 per cent).
On the other hand major decline is observed in the prices of potatoes (8.66 per cent), tomatoes (1.01 per cent), vegetable ghee 2.5 kg (0.61 per cent), cooking oil 5 litre (0.44 per cent), eggs (0.40 per cent), mustard oil (0.24 per cent), gur (0.19 per cent) and garlic (0.15 per cent). During the week, out of 51 items, prices of 15 (29.41 per cent) items grew, 09 (17.65 per cent) items declined and 27 (52.94 per cent) items remained stable. The year-on-year trend depicts increase of 43.25 per cent, gas charges for Q1 (1108.59 per cent), cigarettes (93.22 per cent), chilies powder (81.74 per cent), wheat flour bag (73.81 per cent), garlic (70.67 per cent), tomatoes (65.26 per cent), rice IRRI-6/9 (58.49 per cent), rice basmati broken (58.47 per cent), gents sponge chappal (58.05 per cent) and sugar (54.25 per cent) while decline is observed in the prices of onions (12.57 per cent), mustard oil (5.16 per cent), vegetable ghee 1 kg (1.14 per cent) and bananas (0.20 per cent).
The 241 million people of Pakistan experienced its highest-ever inflation in 2023, with its currency dipping to historic lows until a $3 billion IMF bailout averted an imminent sovereign default in July. Monthly inflation for December recorded a 0.8 per cent rise from the previous month. Inflation was showing some signs of a slowdown based on month-on-month inflation statistics. It is expected that Pakistan’s inflation rate will ease to almost 20 to 22 per cent in the 2024 financial year. State Bank of Pakistan would keep inflation expectations anchored to attain its medium-term target of 5 to 7 per cent. 2023 was truly the year when inflation destroyed the remaining confidence across households. The depreciating currency, rising energy prices, and the second-and third-order effects on yet another ongoing IMF programme ensured that inflation continued to wreak havoc across large swathes of the economy.