Pakistan's SPI Records Fifth Consecutive Week of Inflation Decline

The latest data from the Pakistan Bureau of Statistics (PBS) and local research firms reveal that the Sensitive Price Indicator (SPI) experienced a 1.06% decrease in week-on-week inflation for the week ending May 16, 2024. This decline, the fifth consecutive week of its kind, was primarily driven by lower prices of essential items such as tomatoes, onions, garlic, petrol, and wheat flour.

Tomato prices dropped by 31.18%, onions by 21.84%, garlic by 7.76%, petrol by 5.32%, and wheat flour by 3.66%. Additionally, other commodities like LPG, diesel, Basmati rice, chilli powder, masoor pulse, and bananas also saw price reductions of up to 3.66%. However, certain items like cooked daal, shirting, potatoes, beef, mutton, gram pulse, energy savers, long cloth, eggs, and cooked beef experienced marginal price increases.

Short-term inflation has reached a 22-month low of 21.22% compared to the same period last year, although it remains in double digits. The Consumer Price Index is anticipated to reflect a monthly inflation rate of 13-13.5% in May, a decrease from 17.1% in April and a significant drop from the high of 38% in May 2023. This downward trajectory in inflation may lead the central bank to consider reducing its key policy rate in June, which has been maintained at a record high of 22% for the past 11 months.

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