Short-term inflation hits record high of 48.35pc

Weekly inflation measured by the Sensitive Price Index (SPI) rose to an unprecedented 48.35 per cent year-on-year (YoY) for the combined income group for the week ending on May 4, according to data released by the Pakistan Bureau of Statistics (PBS) on Friday.

Prior to this, the highest-ever percentage of short-term inflation year-on-year was recorded for the week ending on April 19 at 47.23pc.

As for the week ending on May 4, PBS data showed that short-term inflation increased by 1.05pc week-on-week (WoW) as a “major increase” was seen in the prices of chicken, potatoes, powdered milk, pulses, eggs, mutton and bread. Meanwhile, non-food items, including footwear and soaps, also became costlier.

The SPI monitors the prices of 51 essential items based on a survey of 50 markets in 17 cities across the country. During the week under review, the prices of 30 items increased, nine decreased and 12 remained unchanged.

The year-on-year SPI has been steadily on the rise since August last year and remained mostly above 40pc. It rose to 42.31pc on August 18 last year, followed by 45.5pc on September 1 that year and 46.65pc during the week ending March 22 before hitting an all-time high of 47.23pc for the week ending April 19 this year.

Moreover, the SPI has also mostly increased since the start of Ramazan because of record rupee devaluation, costly petrol prices, a hike in sales tax and higher electricity charges. One of the factors for the increase in prices of perishable products is due to the higher transportation charges.

The only tool the government has used so far to tame inflation was a steady increase in the interest rates which rose to 21pc — a record level in the country’s history.

The government has been taking strict measures — hikes in fuel and power tariffs, withdrawal of subsidies, market-based exchange rate, and higher taxation — under the International Monetary Fund (IMF) programme to generate revenue for bridging the fiscal deficit, which may result in slow economic growth and higher inflation in the coming months.

However, the government has yet to unlock the IMF programme despite taking all inflationary and austerity measures.

The increase in the SBP policy rate, sales tax on most items, and 25pc on more than 800 imported food and non-food items will further increase the retail prices of consumer goods.