WPI sees largest YoY increase in 24 months

July 4, 2021 (MLN): Wholesale prices jumped 20.85% (highest in 24 months) on the back of sharp increase in prices of food and energy items, remaining in double-digits for the fourth month in a row, latest data released by the Pakistan Bureau of Statistics (PBS) showed.

On a year-on-year basis, items under the food basket whose prices saw a sharp spike included fiber crops, witnessing an increase of 62%; millet/bajra 98%; eggs 32.83%; vegetable ghee 31.34%; 63% sugar; and 48% spices. On the other hand, cotton and silk fabrics’ prices increased by 37.39% and 31.41% respectively whereas the remaining impetus to the YoY increase came from an increase in prices of kerosene oil (127.65% YoY), furnace oil (86.62%), diesel oil (72.14%), motor spirit (46.05%) and timber (39.26%).

The WPI measures the directional movement of prices for a set of selected items in the primary and wholesale markets and are usually a guiding force behind consumer prices. The WPI, calculate by the PBS, covers 419 items divided into five groups reflecting data collected from wholesale markets in 19 cities of the country.

On a month-on-month basis, WPI in June increased by 0.91% from May with a major push to the upward increases coming from a 23% jump in prices of vegetables, 17% in spices and 8.26% in fibre crops. Meanwhile, among industrials, prices of steel bars & sheets and fertilizers rose 5.88% and 2.04% respectively.

The rate of wholesale inflation during the last 12 months declined to 9.5% from 10.45% during the last fiscal year mainly on account of lower readings in the first eight months of FY21. However, the inflationary trend in WPI has again picked up, averaging at 17.86% during March-June compared to 5.31% in the first eight months of FY21.

WPI year-on-year declined to as low as 0.93% in June 2020 in the wake of the pandemic and remained quite low till January 2021 before picking up pace as the economic activity resumed and vaccination roll-out.

Meanwhile, Consumer Price Index (CPI)-based monthly inflation clocked in at 9.7% in June, below the 10.1% estimates.

The government has set the FY2021-22 target for inflation at 8%.

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