KARACHI: SPI Overview for February 20, 2025
The Sensitive Price Indicator (SPI) for the week ending February 20, 2025, recorded a 0.27% increase compared to the previous week (WoW). On a year-on-year (YoY) basis, the SPI rose by 1.2%, suggesting moderate inflationary pressures when compared to prior weeks.
Price Increases Driven by Essential Items
The rise in the SPI was mainly attributed to higher prices of essential food items. Notable price hikes were observed in bananas (11.89%), eggs (7.80%), chicken (4.47%), garlic (1.08%), sugar (0.65%), beef (0.52%), cigarettes (0.49%), mutton (0.22%), pulse masoor (0.15%), and washing soap (0.07%).
Declines in Prices of Key Commodities
Conversely, prices of several items decreased during the same period. Tomatoes dropped by 2.81%, diesel by 1.49%, pulse gram by 1.24%, onions by 1.16%, potatoes by 0.90%, pulse mash by 0.60%, LPG by 0.58%, petrol by 0.36%, broken Basmati rice by 0.34%, vegetable ghee by 0.32%, and pulse moong by 0.30%.
Breakdown of Price Changes
Out of the 51 items monitored, 11 items (21.57%) saw price increases, 16 items (31.37%) experienced price reductions, and 24 items (47.06%) remained stable.
Year-on-Year Price Changes
The YoY SPI increase of 1.21% was largely driven by significant price spikes in items such as ladies’ sandals (75.09%), pulse moong (28.07%), pulse gram (26.20%), powdered milk (25.84%), bananas (24.15%), beef (22.47%), potatoes (20.71%), garlic (19.18%), vegetable ghee (16.41%), Q1 gas charges (15.52%), shirting (14.11%), and firewood (12.73%).
However, substantial declines were noted in tomatoes (58.82%), onions (49.86%), wheat flour (37.05%), chili powder (20%), Q1 electricity charges (18.92%), pulse mash (12.03%), pulse masoor (11.43%), broken Basmati rice (9.15%), diesel (8.07%), Irri-6/9 rice (7.60%), petrol (6.97%), and LPG (1.32%).
Stable Inflation Trend
The 1.2% YoY increase suggests a stable inflationary trend, significantly lower than the double-digit inflation seen in mid-2024. This points to a gradual easing of inflationary pressures, though volatility remains in some essential commodities.
Inflation Forecast for February 2025
Arif Habib Limited’s report predicts that headline inflation for February 2025 will fall to a 112-month low of 2.2% YoY, down from 2.4% in January 2025. Month-on-month (MoM), inflation is expected to decline by 0.21%, the lowest level since October 2015, when it was 1.61%.
Average Inflation for FY25
For the first eight months of FY25 (8MFY25), average inflation is estimated at 6.04%, a sharp decline from the 28% pace recorded in 8MFY24. Food inflation is expected to decrease by 1.1% MoM and 2.6% YoY, mainly due to lower MoM prices for staples like wheat flour (-1.6%), eggs (-10.8%), potatoes (-22.2%), onions (-24.9%), and tomatoes (-51.7%).
Housing and Energy Index Outlook
The housing and energy index is projected to decrease by 0.3% MoM, mainly due to a 1.3% drop in electricity prices. This reduction reflects the impact of a negative fuel cost adjustment (FCA) of Rs1.23 per kilowatt-hour for December 2024, which will be reflected in February 2025 bills, compared to a negative FCA of Rs0.76 the previous month.
Transport Index Projections
The transport index is expected to rise by 1.1% MoM, driven by increases in petrol and diesel prices. However, on a YoY basis, it will remain 0.3% lower, reflecting a high base effect from the previous year.
Outlook on Inflationary Pressures
The consistent low YoY inflation over recent months is largely attributed to the high base effect, alongside declines in food and housing indices. Looking ahead, if global commodity and energy prices remain stable, and the Pakistani rupee holds steady, these factors will support a stable inflation outlook, helping to contain price pressures.
