According to official data reported by media, short-term inflation in Pakistan experienced a significant year-on-year increase of 29.21% for the week ending on July 26. The surge in inflation is primarily attributed to the sharp rise in electricity and Liquefied Petroleum Gas (LPG) prices.
The Sensitive Price Index (SPI), a measure of short-term inflation on a week-on-week basis, rose by 3.73%, marking the highest increase in the past two months. During the reviewed period, electricity charges increased by 20.98%, while LPG saw a rise of 4.12%, impacting the overall inflation rate.
Out of the 51 items included in the SPI basket, prices of 20 goods witnessed a substantial increase, while prices of seven items decreased, and the remaining 24 items remained unchanged compared to the previous week. The notable items that experienced the biggest price surge on a week-on-week basis were powdered chillies, tomatoes, eggs, LPG, garlic, onion, gur, and potatoes.
Factors contributing to inflation
Several factors have contributed to the rising inflation, including the depreciation of the Pakistani rupee, soaring petrol prices, an increase in sales tax, and higher electricity bills. In response to bridging the fiscal deficit, the Pakistan government has implemented strict measures such as increasing fuel prices and power tariffs, withdrawing subsidies, adopting a market-based exchange rate, and higher taxation.
However, such stringent actions may have implications for the country’s economic growth, potentially leading to slower economic expansion and higher inflation in the coming months, as reported by media.
