The Sensitive Price Indicator (SPI) jumped sharply by 7.04% year-on-year, primarily driven by higher fuel and utility costs despite some relief from falling food prices, amid the US-Israel illegal attacks on Iran.

Data released by the Pakistan Bureau of Statistics showed that SPI-based inflation for the week ended March 18, 2026, remained elevated on an annual basis due to steep increases in energy tariffs. Diesel prices surged by nearly 30% year-on-year, while gas charges rose by a similar magnitude, reflecting continued adjustments in administered energy prices. Petrol prices also recorded an increase of over 25% compared to the same period last year, highlighting the sustained burden of fuel costs on consumers.

The rise in energy prices has had a cascading impact on essential commodities, particularly food. Wheat flour prices climbed 26.5% on a yearly basis, driven by higher production and transportation costs. Other food items such as beef, powdered milk, and mutton also posted notable increases, indicating that inflationary pressures remain broad-based across key household consumption categories.

However, the overall inflation reading was partially offset by significant declines in several perishable items. Potato prices dropped by more than 50% compared to last year, while chicken and eggs fell by around 20% each. Similarly, pulses and sugar registered double-digit declines, providing some relief to consumers and preventing a sharper rise in the SPI.

On a week-on-week basis, SPI increased by 0.21%, mainly due to a spike in vegetable and poultry prices. Tomatoes recorded a sharp increase of 24.9%, followed by chicken (7.3%) and bread (1.1%). Among non-food items, prices of energy savers, cigarettes, georgette, and firewood also edged up during the week.

Conversely, several essential kitchen items witnessed price declines on a weekly basis. Garlic prices fell by 4.8%, onions by 2.5%, and wheat flour and sugar also posted modest decreases. Liquefied petroleum gas (LPG) prices dropped by 2.7%, offering limited relief on the energy front.

Analysts believe that while falling prices of perishables may provide short-term respite, the underlying inflation outlook remains firm due to structural factors, particularly elevated energy tariffs, taxation measures, and exchange rate pass-through. These factors continue to keep inflation sticky, even as some food prices ease.

Inflation has shown significant week-to-week volatility in recent weeks, largely driven by fluctuations in perishable food prices, according to the SPI trend data compiled by Optimus Capital Management. The data highlights a sharp spike of 1.89% week-on-week in early March, followed by a moderation and then a smaller increase of 0.21% in the latest week, suggesting that price pressures are easing but remain unstable.

While food-driven shocks continue to influence short-term movements, the overall SPI index maintains a gradual upward trajectory, consistent with the 7.04% year-on-year increase, reflecting persistent underlying inflation. The data points to a pattern where temporary declines in items like vegetables and staples are offset by recurring spikes, indicating that inflation is not fully subsiding but rather stabilising at an elevated level due to structural cost pressures, particularly energy and utilities.