Food prices surge, driving Pakistan’s weekly inflation up 0.95%

Pakistan’s weekly inflation rose by 0.95% for the period ending July 10, driven by notable hikes in food prices, according to official data released Friday.

Prices of essential items such as chicken soared by 22.61%, followed by tomatoes (13.45%), onions (6.25%), potatoes (2.79%), garlic (2.36%), sugar (1.90%), and broken basmati rice (0.84%).

Meanwhile, several staples saw a decline, including LPG (-2.56%), mustard oil (-0.81%), moong pulse (-0.41%), five-liter cooking oil (-0.20%), and flour and vegetable ghee (2.5 kg) each edging down by 0.02%.

On an annual basis, consumer prices recorded a modest decrease of 1.23%, reflecting continued disinflationary trends.

Despite easing headline figures, core inflation, excluding food and energy, remains resilient. In June, urban core inflation rose 6.9% year-over-year, while the rural metric climbed 8.6%, both slightly lower than May readings.

Analysts noted a reversal in the gap between core inflation and CPI since mid-FY24, attributed to pronounced price corrections in rural areas.

The State Bank of Pakistan (SBP) maintained policy rates during its last Monetary Policy Committee (MPC) meeting. With the policy rate down by 11 percentage points over the past year, real interest rates remain elevated near 7.8% amid persistent disinflation.

Analysts anticipate a possible rate cut of 50 to 100 basis points in the upcoming MPC meeting scheduled for the end of July, citing improved inflation readings.