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Business Recorder
6 days ago
- Business
- Business Recorder
Jul CPI up by 4.1pc YoY
ISLAMABAD: Sugar prices soared by 29 percent in July 2025 on year-on-year basis and 6.11 percent on a month-on-month basis. Whereas, the inflation benchmark Consumer Price Index (CPI) increased by 4.1 percent in the first month of FY06. This was revealed in the monthly review on prices indices issued by Pakistan Bureau of Statistics on Friday. Inflation benchmark CPI increased by 4.1 percent in July 2025 on year-on-year (YoY) basis and on month-on-month (MoM) basis it increased by 2.9 percent in July 2025. June CPI inflation clocks in at 3.2pc YoY The CPI inflation Urban, increased to 4.4 percent on YoY basis and on month-on-month basis, it increased by 3.4 percent. Whereas the CPI inflation rural, increased by 3.5 percent on YoY basis and 2.2 percent on month-on-month basis. The Sensitive Price Index (SPI) inflation on YoY basis decreased by 0.9 percent, while on MoM basis increased by 3.1 percent. Whereas, Whole Price Index (WPI) inflation on YoY basis decreased by 0.5 percent in on MoM basis and it increased to 1.2 percent. Among the major food items prices, sugar prices increased by 29.43 percent on YoY basis and 6.11 percent on MoM basis, moong 19.49 percent on YoY basis and decreased by 0.59 percent on MoM basis, butter increased by 18.9 percent on YoY basis and 0.55 percent on MoM basis, honey up by 18.68 percent on YoY basis, condiments and spices increased by 14.95 percent on YoY basis and decreased by 0.97 percent on MoM basis, gur increased by 14.11 percent on YoY basis and 3.48 percent on MoM basis, vegetable ghee increased 12.29 percent on YoY basis and decreased by 0.03 percent on MoM basis, fresh fruits increased by 11.56 percent on YoY basis and reduced by 7.7 percent on MoM basis, meat prices increased by 11.14 percent on YoY basis and 0.61 percent on MoM basis, sweat meat increased by 10.29 percent on YoY basis, mustard oil increased 8.98 percent on YoY basis, chicken increased by 7.7 percent on YoY basis and 29.73 percent on MoM basis. Readymade food is up by 7.4 percent on YoY basis. Prices of fish increased by 7.25 percent and cooking oil by 7.05 percent on YoY basis. On YoY basis, tomatoes prices decreased by 47.61 percent, onions 47.36 percent, pulse mash 23.20 percent, wheat flour 21.52 percent, wheat 21.29 percent, tea 17.75 percent, wheat 21.29 percent, wheat products 9.98 percent, masoor 9.22 percent, potatoes 7.76 percent, pulse gram 6.53 percent, gram whole 4.82 percent, besan 2.97 percent and beans 1.60 percent. Among non-food items on YoY basis motor vehicle tax increased by 168.79 percent, gas charges 22.91 percent, water supply 13.86 percent, household textiles 13.45 percent, footwear 12.71 percent and drugs and medicines 12.27 percent. Whereas electricity charges decreased by 16.85 percent, text books 7.75 percent, liquified hydrocarbons 2.24 percent, washing soap, detergents and match box 2.19 percent and motor fuel 0.14 percent on YoY basis. According to PBS, measured by non-food non-energy urban core inflation increased to 7.0 percent and MoM basis it increased by 0.8 percent. Measured by non-food non-energy rural core inflation increased by 8.1 percent on YoY and on MoM basis it remained stable at 0.7 percent. Whereas, core urban trimmed inflation increased to 5.1 percent on YoY basis and on MoM basis it increased by 1.0 percent. The rural trimmed inflation increased by 4.9 percent on YoY basis and on MoM basis, it is increased by 0.7 percent. Copyright Business Recorder, 2025
Business Recorder
6 days ago
- Business
- Business Recorder
SPI-based inflation down 0.35pc WoW
ISLAMABAD: The Sensitive Price Index (SPI)-based inflation decreased by 0.35 per cent for the week ended July 31, 2025 compared to 4.07 percent increase in the previous week. Major decrease is observed in the prices of tomatoes 17.26 per cent, chicken 4.76 per cent, bananas 2.97 per cent, moong 1.55 per cent, LPG 1.39 per cent, potatoes 0.73 per cent, maash 0.61 per cent, wheat flour 0.59 per cent and pulse gram 0.58 per cent. On the other hand, 1.80 per cent increase is observed in the prices of eggs, firewood 1.11 per cent, cooked beef 1.08 per cent, powdered milk 0.49 per cent, energy saver 0.25 per cent, garlic 0.24 per cent, cigarettes and mutton 0.13 per cent each, beef 0.10 per cent, gur 0.04 per cent and onions 0.02 per cent. Weekly SPI inflation up 4.07% During the week, out of 51 items, prices of 11 (21.57 per cent) items increased, 12 (23.53 per cent) items decreased and 28 (54.90 per cent) items remained stable. The year-on-year trend depicts an increase of 1.98 per cent. Major increase is observed in the prices of ladies sandal 55.62 per cent, gas charges for Q1 29.85 per cent, sugar 21.66 per cent, moong 14.27 per cent, beef 14.16 per cent, vegetable ghee 2.5 kg 12.33 per cent, vegetable ghee 1kg 11.95 per cent, firewood 11.75 per cent, gur 11.23 per cent, eggs 10.94 per cent, cooked beef 9.31 per cent and lawn printed fabric 7.32 per cent. While a major decrease is observed in the prices of onions 49.32per cent, tomatoes 42.31 per cent, garlic 23.78 per cent, wheat flour 22.90 per cent, mash 21.40 per cent, tea Lipton 17.93 per cent, potatoes 15.95 per cent, chicken 11.71 per cent, electricity charges for Q1 10.02 per cent and LPG 0.86 per cent . The SPI for consumption groups up to Rs17,732 with an decrease of 0.42 per cent recorded at 316.01 points compared to 317.34 points in previous week. The SPI for consumption group of Rs17,732 to 22,888 with a decline of 0.42 per cent was recorded at 316.10 points against previous week's calculation of 317.42 points. Whereas, the SPI for the income group of Rs22,889-29,517 with a reduction of 0.37 per cent was recorded at 339.14 points against previous week's recording of 340.39 points. The SPI for the income group Rs29,518-44, with a decrease of 0.37 per cent was recorded at 327.16 points against previous week's reading of 328.38 points and SPI for the monthly income group above Rs44,175 registered a reduction of 0.33 per cent was recorded at 327.85 points against 328.92 points of the previous week calculation. The combined increase for all expenditure groups recorded at 327.94 points compared to 329.09 points of previous week registering a reduction of 0.35 per cent. Copyright Business Recorder, 2025
Business Recorder
29-07-2025
- Business
- Business Recorder
To cut or not to cut
Recently, our business community has strongly advocated for lowering interest rates. While cheap credit is tempting for businesses, mistimed rate cuts can quickly turn problematic for the SBP. This brings us back to a question central bankers have long grappled with: to cut or not to cut? Expectations for a significant rate cut have risen. Pakistan's policy rate currently stands at 11 percent, down from a peak of 22 percent in June 2024. The State Bank has already delivered 1,100 basis points of cuts in just over a year. Now, businesses are pressing for rates to drop to 5-6 percent, representing another 500 to 600 basis points reduction, bringing borrowing costs even lower than the 7 percent emergency levels during Covid-19. This demand would be appealing if inflation hadn't surged following the recent petroleum price hike. Just as business leaders intensified their push for ultra-low rates, Pakistan's dependence on imported energy provided a sharp reality check. The government increased petrol prices by Rs8.36 per liter and diesel by Rs10.39 per liter from July 1st, lifting fuel costs to Rs272.98 and Rs266.79 per liter, respectively. This timing is especially troubling, as Pakistan's Sensitive Price Index jumped by 4.07 percent. Gas charges surged 29.85 percent, electricity by 21.46 percent, and even tomatoes increased by 22.93 percent due to higher transportation costs. Of 51 tracked items, 14 increased, while only 12 decreased. Drastic rate cuts could quickly overheat the economy, yet the business community's requests aren't entirely unjustified. Pakistan's exports rely heavily on textiles; while Vietnam maintains rates at 6.3 percent, Indonesia at 6 percent, and India at 5.5 percent, Pakistan's 11 percent rate seems excessively harsh. For textile exporters operating on slim margins, a 5 percent difference significantly affects pricing competitiveness. The potential upside of sharp rate cuts appears immediately attractive. Auto financing has already demonstrated this; cutting rates from 22 percent to 11 percent sparked seven consecutive months of loan growth, with outstanding auto loans recently reaching Rs276.6 billion. Car sales surged 43 percent. If rates dropped another 5 or 6 percent, SBP's Rs3 million loan cap (which the industry wants to be raised to Rs6 million) would become irrelevant as credit accessibility expands dramatically. Under favourable conditions, the government could benefit significantly. Following the recent budget, the government is strategically placed to benefit from any credit-driven boom. The 2025-26 budget abolished the 7 percent Federal Excise Duty on property transfers entirely and substantially reduced Islamabad's stamp duty from 4 percent to 1 percent. Lower taxes combined with cheaper credit could significantly boost transaction volumes, offsetting the tax cuts. In Punjab, KPK, and Balochistan, a rate cut would energize property transactions, each generating stamp duty revenue. Vehicle registrations would increase sharply, driving up fees and annual taxes. New digital transaction taxes would automatically capture growing e-commerce through payment gateways. Import volumes such as mobile phones, electronics, auto parts, and machinery would climb significantly, boosting customs revenues. Revived consumer spending would enhance sales tax collections. Business expansions would push more employees above taxable thresholds. The fiscal potential appears substantial when current revenues are multiplied by anticipated growth. However, numbers alone don't reveal the full picture. Under the IMF programme, Pakistan can no longer subsidize energy prices. With energy-driven inflation rising, and it certainly would if rates fell to 5-6 percent, the government wouldn't have room to cushion the blow. Monetary policy then becomes our primary shield against inflation. Imagine businesses competing for workers, materials, and commercial space with cheap 5 percent loans. Households with easy borrowing power would chase cars, appliances, and homes. Our hard-earned USD 1.2 billion current account surplus would vanish as imports escalate. The rupee would weaken under mounting import pressure, pushing inflation higher. Pakistan has experienced this scenario before; brief periods of excitement followed by external crises demanding emergency rate hikes beyond 20 percent. Ironically, the businesses advocating for 5 percent rates today would suffer most when the inevitable adjustment arrives. The dilemma faced by SMEs adds complexity. SMEs constitute 90 percent of businesses and provide 30 percent of jobs, yet receive only 6-7 percent of bank lending. They often pay 13 to 14 percent, while large corporations enjoy preferential rates. For SMEs, a drop from 11 percent to 6 percent could mean survival versus closure. Still, flooding SMEs with cheap credit while inflation accelerates could prove equally destructive; their customers lose purchasing power as input costs rise. Most concerningly, aggressive rate cuts threaten our USD 7 billion IMF lifeline. The IMF programme sets explicit inflation and external account targets. Deviating from these goals for short-term stimulus would risk losing IMF support, other multilateral funding, credit rating downgrades, and potential financial collapse. Politicians understand these stakes but face immense electoral pressures. The political cycle creates powerful incentives for artificial growth stimulation. The SBP's independence is crucial; it must withstand political expediency and aggressive business lobbying. What direction should the SBP take on July 30th? Neither paralysis nor wholesale surrender provides the solution. Comparing Pakistan with regional peers is easy on paper, but the realities differ significantly. With Pakistan under the IMF's 26th programme, our circumstances are distinctly different. Our regional peers have challenges of their own (tariffs, employment, inflation), but these differ greatly from ours. Further easing should rely on concrete evidence: sustained inflation below 5 percent, a continuous current account surplus, genuine export growth, and controlled import expansion. Businesses deserve encouragement, but alongside clear accountability. This moment demands structural actions beyond merely adjusting interest rates. Businesses advocating 5 percent rates must support conditions enabling those low rates sustainably. Productivity must rise, exports must increase, import dependence must decline, and the informal economy must formalize. The SBP could channel lending toward productive sectors such as export-oriented industries, import substitution, technological upgrades; it should restrict credit for consumption and imports through targeted actions. Special Export Zones (SEZs) providing affordable credit for export-focused sectors represent an effective strategy. Broad, indiscriminate rate cuts represent a risky path, as previously detailed. Offering cheaper refinancing options for exporters and SMEs while maintaining standard consumer loan rates can achieve a strategic balance. Though not perfect, targeted support is preferable to across-the-board reductions. The Rs3 million vehicle loan ceiling should remain unchanged despite industry pressures; Pakistan requires productive investments, not increased traffic and fuel imports. Direct credit toward expanding productive capacity rather than fuelling consumption. Pakistan faces a critical decision point. Business frustration after enduring prolonged high interest rates is understandable, yet the solution proposed by businesses risks destabilizing the economy. Genuine progress demands patience, restraint, and fundamental reforms rather than quick rate cuts. The SBP must balance growth aspirations with stability requirements, navigating political pressures against economic realities. Interest rates are blunt instruments; careless handling within Pakistan's fragile economy resembles surgery with imprecise tools. July 30th would be a decisive moment. Pakistan must choose between sustainable progress and another boom-bust cycle. Prudence, not impulsiveness, should guide this decision. The real question isn't just about reducing rates, but about creating conditions for sustainable low-interest growth. Until then, the SBP must act with caution, providing targeted relief while mitigating inflation risks. Copyright Business Recorder, 2025
Business Recorder
21-07-2025
- Business
- Business Recorder
Gas tariffs: Will the PBS see it (right)?
Earlier this month, BR Research highlighted how millions of domestic gas consumers are facing a significant hike in their monthly bills — even in the absence of any change in base tariffs. The shift came not through the headline rate per MMBTU, but more subtly through higher minimum charges and a sharp increase in fixed monthly fees. With the July 1 gas sales price notification now in effect, early signs from the Pakistan Bureau of Statistics (PBS) suggest the impact may again be flying under the radar. The latest Sensitive Price Index (SPI) update released on July 18, 2025, showed no change in gas prices — despite the fact that minimum monthly charges for protected consumers have risen from Rs645 to Rs968, and for unprotected users from Rs1,436 to Rs2,350, largely driven by increased fixed charges and a recalibrated floor based on first-slab energy usage. In previous instances — notably during the last two tariff revisions — the PBS revised its gas price index within two weeks of the respective notifications (dated 8th and 15th of the month). This time, the notification was issued on the 1st of July, yet three weeks in, the price index remains unchanged. While this may be the result of a procedural lag — perhaps PBS logs utility tariff changes in the following calendar month (last two instances do not support this lenient view) — the omission is worth flagging, particularly because the nature of this change is less visible. Importantly, this isn't about assigning blame. But the concern is valid, especially when more than half of all domestic gas consumers — 55 percent (4.1 million of 7.1 million) by latest SNGPL data — fall in the protected category, and the percentage increase in their minimum payable bills is the highest. The SPI only covers prices for the bottom quintile – all of which invariably falls within the protected category. (More on the ills of blanket 'protected' and 'non-protected' on different regions, later in these columns). The piece dated July 9, 2025 had emphasized the importance of accurately capturing these changes in inflation reporting. With both fixed charges and minimum billing methodology quietly revised, the net effect on consumers is material, even though headline tariffs remain unchanged. That subtlety increases the risk of the change being statistically missed — and with it, the risk of understating inflation for the lower three consumption quintiles, where most of these users reside. Here's a soft reminder to the PBS: this time the change may not be loud, but it is real — and it matters. Get it right, and get it in time. Copyright Business Recorder, 2025
Business Recorder
19-07-2025
- Business
- Business Recorder
SPI-based inflation slows down
ISLAMABAD: The Sensitive Price Index (SPI)-based inflation upward trend slowed down as it increased by 0.38percent for the current week ended on July 17, 2025 compared to 0.95percent in the previous week. The statistics issued by Pakistan Bureau of Statistics (PBS) show a major increase in the prices of chicken 8.31percent, eggs 5.87percent, diesel 4.15percent, petrol two percent, onions 1.76percent, garlic 1.70percent, potatoes 1.46percent, firewood 0.49percent, cooked daal 0.35percent, mutton and powdered milk 0.31percent each and cigarettes 0.25percent. On the other hand, a decrease is observed in the prices of tomatoes 9.34percent, bananas 1.57percent, LPG 0.95percent, pulse gram 0.31percent, moong 0.30percent, wheat flour 0.25percent, cooking oil 5-litre and sugar 0.21percent each and IRRI-6/9 0.05percent. SPI-based inflation rises During the week, out of 51 items, prices of 22 items (43.14percent) increased, nine items (17.65percent) decreased and 20 items (39.22percent) remained stable. The Year-on-Year trend depicts a decrease of 1.61percent. Major decrease is observed in the prices of onions 48.65percent, tomatoes 48.44percent, electricity charges for Q1 37.62percent, garlic 23.17percent, wheat flour 22.56percent, maash 20.67percent, tea Lipton 17.93percent, potatoes 13.69percent, masoor 9.02percent and petrol 1.24percent. While major increase is observed in the prices of ladies sandal 55.62percent, sugar 27.76percent, moong 17.91percent, beef 14.62percent, gur 12.50percent, vegetable ghee 2.5kg 12.46percent, vegetable ghee 1kg 12.32percent, chicken 11.77percent, firewood 10.77percent, bananas 9.67percent, lawn printed 7.32percent and georgette 7.20percent. Copyright Business Recorder, 2025
