Higher food prices, expensive fuels fuel Pakistan's weekly inflation
Business
Indirect taxes imposed by Islamabad responsible for this trend
Upward movement in prices may affect interest rate cuts
Government opted for burdening masses in budget to secure another IMF programme
ISLAMABAD (Web Desk) – Indirect taxes on food items and higher fuel prices meant that the Sensitive Price Index (SPI) – the weekly measure of inflation – reached 24.36 per cent year-on-year basis, latest data released by Pakistan Bureau of Statistics (PBS) shows.
According to the PBS, the week ending July 18 witnessed a 0.76pc increase, as an overwhelming majority in Pakistan is experiencing an unprecedented cost-of-living crisis, further exacerbated by inflationary measures like petrol and diesel prices, which automatically boosts transportation costs both for people and goods.
Hikes in energy tariffs and fuel prices are essential part of the latest $7 billion IMF programme, which now awaits formal approval by the Washington-based institution’s executive board after the two sides reached a staff-level agreement under Extended Fund Facility (EFF).
Taxes levied on poultry products, for example, have resulted in skyrocketing chicken prices, which earlier controlled by banning chick exports. On Saturday [June 20], the chicken meat in Lahore was fixed at Rs595 per kilogramme.
Earlier, packed milk prices were increased by over Rs60 per kg by different brands after the federal government went for imposing GST on this essential food item in an attempt to collect more taxes from ordinary people instead of bringing those affluent classes into tax net, who have been avoiding paying tax.
Similarly, the latest taxation measures have also made imported food items from Iran and Afghanistan more expansive, resulting in higher fruit and vegetable prices as well as packed spices' prices.
Earlier in May 2023, the SPI had touched a record high of 48.35pc.
The continuous surge in weekly inflation along with the rebound witnessed in June consumer price index (CPI), the revenue collection endeavour under taken by Islamabad may also sustain inflation to a level where the much-desired Pakistan’s interest rate cuts would become very difficult, if not impossible.
Meanwhile, the latest SPI figures depict an 570pc year-on-year increase in gas prices followed by onions 105.46pc, tomatoes 57.70pc, powered milk 39.15pc, garlic 36.05pc, chilies powder 28.98pc, LPG 23.11pc and electricity charges 21.46pc.
When compared with the previous week ending July 11, the chicken prices were up by 10.26pc, powdered milk 4.56pc, petrol 3.77pc, eggs 2.76pc, potatoes 2.30pc, diesel 2.25pc and garlic 2.20pc.
