Inflation: What does Sensitive Price Index show?

EDITORIAL: For the week ending 27 August, the Sensitive Price Index (SPI), compiled and released every Friday by Pakistan Bureau of Statistics (PBS), comprising 51 essentials from 50 markets in 17 cities, showed a rise of 0.05 percent with a major increase as expected on LPG (3.46 percent), diesel (2.44 percent), and electricity 2.06 percent and petrol (1.71 percent).

External factors sourced to the ongoing Middle East conflict can be held legitimately responsible for the rise in domestic prices of these four items.

Seasonal supply fluctuations with respect to perishables as well as higher costs associated with higher transport costs were evident in some other items though all experienced under 1 percent rise, including pulse gram (0.88 percent), wheat flour (0.39 percent), eggs (0.14 percent), and pulse mash (0.17 percent).

National Disaster Management Authority (NDMA), the 2026 monsoon season across Pakistan has resulted in 175 fatalities and 500 injuries between June 26 and August 28 with cumulative road damage of 34.43 km, bridges 41, but the impact on crop output has not yet been quantified as the monsoon is not over.

However, the NDMA has posted on its website that there was below normal rainfall across major agricultural hubs with the most significant shortages in north-eastern and central Punjab, south-eastern Sindh and parts of Khyber Pukhtunkhwa.

Above-normal daytime temperatures, exacerbated by dry spells, increased evaporation rate, thereby placing heavier demand on the irrigation system while the rise in humidity created ideal microclimates on leaf surfaces for fungal spores and bacteria to germinate, spreading blights, powdery mildew, and root rot.

Pakistan usually imported fertilizer from Saudi Arabia to meet its shortfall at a cost of around 150 million dollars; however, due to the Middle East crisis greater reliance was placed on Morocco this year.

Be that as it may, the projection is that there will be global shortage of fertilizer due to the conflict that would impact negatively on farm output throughout the world, but particularly in African countries with some projecting shortages that would lead to a rise in food prices. In the event that food prices rise Pakistan would not be immune to a price hike.

Data suggests that Pakistan’s annual food inflation reached 10.64 percent in July 2026, making basic items much more expensive. This partly explains the rise in perishable foods, wheat, flour, and cooking oil.

In June, food prices rose by 9.38 percent, in May by 7.93 percent, and in April by 7.63 percent.

The data for August has not yet been released and, therefore, it is possible that the rise in food prices was contained.

Food forms the largest single expenditure item for poor households; therefore, the lower the income the higher the percentage used to procure food.

However, data released by PBS this Friday past raises some serious concerns given that SPI for lowest expenditure quintile (up to 17,732 rupees) actually declined from 350.03 for week ending on 20 August 2026 to 340.42 this week past while it declined marginally for income quintile from 17,733 to 22,888 rupees – 350.90 on week ending 20 August to 350.55 with the combined expenditure group (all quintiles), witnessing a marginal increase from 360.9 to 361.07.

Questions are increasingly being raised as to the credibility of the PBS data by independent economists with some arguing that the inflation rate is off by 2 to 3 percentage points.

It is important to note that while political considerations may compel government entities to understate some key data with direct implications on the quality of life of the general public yet deliberate manipulation constrains the government from taking appropriate mitigating measures. It is hoped that the data released by PBS is rigorously checked to ensure that the administration can take measures in a timely fashion.

Copyright Business Recorder, 2026