Short-term inflation rises 0.27% WoW

Express Tribune

22-02-2025

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The Sensitive Price Indicator (SPI) for the period ended February 20, 2025 recorded a week-on-week (WoW) increase of 0.27%. On a year-on-year (YoY) basis, the SPI rose 1.2%, reflecting mild inflationary pressures compared to previous weeks.
The increase was driven by price hikes in essential food items, which included bananas (11.89%), eggs (7.80%), chicken (4.47%), garlic (1.08%), sugar (0.65%), beef (0.52%), cigarettes (0.49%), mutton (0.22%), pulse masoor (0.15%) and washing soap (0.07%).
Conversely, a notable decrease was observed in prices of tomatoes (2.81%), diesel (1.49%), pulse gram (1.24%), onions (1.16%), potatoes (0.90%), pulse mash (0.60%), LPG (0.58%), petrol (0.36%), broken Basmati rice (0.34%), vegetable ghee (0.32%) and pulse moong (0.30%).
During the week ended February 20, out of 51 monitored items, prices of 11 items (21.57%) increased, 16 items (31.37%) decreased and 24 items (47.06%) remained stable.
The YoY increase of 1.21% in the SPI was fuelled by significant price spikes for items such as ladies' sandals (75.09%), pulse moong (28.07%), pulse gram (26.20%), powdered milk (25.84%), bananas (24.15%), beef (22.47%), potatoes (20.71%), garlic (19.18%), vegetable ghee (16.41%), Q1 gas charges (15.52%), shirting (14.11%) and firewood (12.73%).
However, a substantial decline was noted in prices of tomatoes (58.82%), onions (49.86%), wheat flour (37.05%), chilli powder (20%), Q1 electricity charges (18.92%), pulse mash (12.03%), pulse masoor (11.43%), broken Basmati rice (9.15%), diesel (8.07%), Irri-6/9 rice (7.60%), petrol (6.97%) and LPG (1.32%).
The 1.2% YoY increase reflects a relatively stable inflationary trend, which is significantly lower than the double-digit growth observed in mid-2024. This suggests a gradual easing of inflationary pressures, though volatility remains in certain essential commodities.
Arif Habib Limited wrote in its report that headline inflation for February 2025 would fall to a 112-month low of 2.2% YoY, down from 2.4% in January 2025. On a month-on-month (MoM) basis, inflation is projected to decline 0.21%, marking the lowest reading since October 2015, when it stood at 1.61%.
For the first eight months of FY25 (8MFY25), average inflation is estimated at 6.04%, a significant drop from the 28% pace recorded in 8MFY24. Food inflation is expected to decrease 1.1% MoM and 2.6% YoY, primarily driven by MoM lower prices of staples, including wheat flour (-1.6%), eggs (-10.8%), potatoes (-22.2%), onions (-24.9%) and tomatoes (-51.7%).
The housing and energy index is projected to dip 0.3% MoM, mainly due to a 1.3% decrease in electricity prices. This drop reflects the impact of negative fuel cost adjustment (FCA) of Rs1.23 per kilowatt-hour for December 2024, which would be passed on in February 2025 bills compared to a negative FCA of Rs0.76 in the previous month.
Meanwhile, the transport index is expected to rise 1.1% MoM, caused by an increase in petrol and diesel prices. However, on a YoY basis, it will stay 0.3% lower, reflecting a high base effect in the previous year.
These consecutive months of low YoY inflation is largely attributed to the high base effect, supported by declines in food and housing indices. Looking ahead, if global commodity and energy prices remain stable and the Pakistani rupee holds steady, they will further support the inflation outlook, helping to keep price pressures contained.