SPI inflation sticky at 11.85% YoY

The index, covering 51 essential items across 50 markets in 17 cities, stood at 374.84, up from 372.43 in the previous week and 335.14 a year ago.While the overall figure underscores persistent price pressures, the lowest consumption quintile (households spending up to Rs17,732 a month) faced a milder 8.45% year-on-year increase and a 0.51% weekly rise, noticeably below the 12.69% annual and 0.74% weekly gains for the highest quintile.

This divergence offers a modest breathing space for the most vulnerable, even as broader inflation remains sticky.Weekly increases were led by liquefied petroleum gas (LPG), which surged 22.44%, broiler farm chicken (12.20%), onions (4.19%), shirting (1.86%), plain bread (1.66%) and wheat flour (1%).

On the other side, tomatoes plunged 21.99%, petrol fell 3.63%, bananas dropped 2.42% and diesel declined 1.68%, providing some comfort.

Of the 51 items, 19 rose, 12 fell and 20 remained unchanged.On a yearly basis, the pain was more concentrated.

LPG was up 107%, onions 73%, electricity charges for Q1 59%, petrol 44%, diesel 42%, chicken 39% and wheat flour 36%.

These gains were amplified by global energy shocks.

Escalating Houthi attacks linked to the Yemen-Saudi conflict, combined with the US-Iran war, now in its eighth month, drove Brent crude to multi-month highs near or above $112-117 a barrel this week on fears of further disruptions through the Strait of Hormuz and strikes on Saudi oil infrastructure.

Local fuel prices eased modestly week-on-week, but the year-on-year surge in petrol, diesel and especially LPG continued to feed into transport, cooking and broader household costs.Furthermore, the monthly headline inflation is projected to rise around 0.9% month-on-month (9.4% year-on-year) despite a food buffer.

The energy index is anticipated to play a major role as geopolitical uncertainty continues to grow.

Core inflation is projected to rise 0.8% MoM, said Optimus Research.Energy index may go up 2.6% MoM.

Prices of motor fuel and liquefied hydrocarbons are expected to rise around 9.3% and 11.3% MoM, respectively, as global oil nears five-month highs.

Resultantly, the housing and transportation baskets are likely to rise 0.7% and 6.7% MoM, respectively.