Sensitive price index: roiling resurgence?

Understanding Price Changes: Is the Sensitive Price Index Making a Comeback?

The Sensitive Price Index (SPI) for the week ending 7 December 2023 against the week ending 30 November 2023 was a high of 42.68 percent year on year and a rise of 1.16 percent from the week before.

In November 2023, the cost of living in Pakistan, measured by the Consumer Price Index (CPI), went down to 29.2 percent. This was surprising and happened because the value of the country’s currency, the rupee, became stronger compared to the U.S. dollar.

This change was influenced by a crackdown on people trying to make quick money in the foreign exchange market.

Comparing Pakistan to Sri Lanka, both countries faced similar economic problems and had to borrow money under tough conditions. Sri Lanka got a 3 billion dollar loan from the International Monetary Fund (IMF) in March 2023, and as a result, its inflation rate dropped significantly from 35.3 percent in April to 3.4 percent in November.

However, Pakistan’s inflation rates were up and down, reaching 29.4 percent in June, going down to 28.3 percent in July, then rising to 31.4 percent in September before stabilizing at 26.8 percent in October. The cost of living, measured by the SPI, increased notably due to higher prices for utilities like electricity and gas.

The World Bank, in their latest report from October 4, 2023, said that high inflation in Pakistan, caused by increasing energy prices and the weakening of the local currency, was likely to slow down economic activity. To improve the situation, the World Bank recommended changes like making the tax system fairer, reducing unnecessary spending, and fixing problems in the energy sector.

The report also highlighted a big problem in Pakistan: many children were not growing well, and most couldn’t read well by the age of 10. The World Bank stressed that fixing these issues was crucial.

In short, without making significant changes in different parts of the country, the economic problems in Pakistan might continue. Depending too much on foreign investment could lead to agreements that make life more expensive for regular people, similar to what happened with contracts related to power production.

Currency Rate In Pakistan – Dollar, Euro, Pound, Riyal Rates On 13 December 2023