Analysis of weekly SPI week ended March 17, 2022.

Byline: S. KAMAL HAYDER KAZMI

The Experts in Pakistan recorded that for most commodity markets, 2020 was undeniably a turbulent year. The outbreak of the pandemic triggered a widespread worldwide shutdown of economic activity that depressed demand and disrupted supply chains for commodities in virtually all sectors counting energy, base metals and agricultural products. They also recorded that Bloomberg commodity Index hit an all-time low in April and the price of crude oil nosedived into negative territory for the first time ever.

Pakistan: SPI (51 items) 2015-16=100

Expenditure Group (Quintile) SPI for week ended % Change Over

17-03-2022 10-03-22 18-03-21 10-03-22 18-03-21

Q1 (Upto Rs. 17,732)###177.17 178.95 157.61 -0.99 12.41

Q2 (Rs. 17,733 - 22,888) 167.53 170.27 147.59 -1.61 13.51

Q3 (Rs. 22,889 - 29,517) 169.78 171.70 148.70 -1.12 14.18

Q4 (Rs. 29,518 - 44,175) 166.64 168.18 145.16 -0.92 14.80

Q5 (Above Rs. 44,175)###170.75 172.87 146.97 -1.23 16.18

Combined###169.06 171.41 146.86 -1.37 15.12

However, 2021 has started projecting an upward trajectory of prices on the back of Covid vaccination and relative deterioration of US dollar. A global economic recovery is predicted around the globe with expansionary monetary policy and fiscal stimulus being offered through several governments as being mainly supportive. Such factors with other demand and supply factors have also boosted inflationary expectations. Continuously increasing commodity prices have an upward inflationary pressure around the world which is further predicted to build up due to the fiscal stimulus packages and reduced interest rates in the wake of Covid-19. Inflation has remained subdued globally till January 2021 because of depressed demand.

But partial lockdowns and resumption in business activities have again started pushing up the prices. Similarly, Pakistan and its regional countries witnessed moderate rise in inflation initially, but it started picking up the pace from January 2021. No doubt, Covid-19 has affected the demand and supply of certain products and hence, their prices also. Reliance on imported goods has exposed Pakistan to inflation which has accentuated because of depreciation and capital outflows. Statistics showed that Pakistan faced highest inflation of 14.5 percent in January 2020, comparing developing and emerging economies both, yet this has reduced to 5.7 percent in January 2021 because of government attempts to contain inflation. Being a net...