Wholesale Price Index
On an average basis, the Wholesale Price Index (WPI) during FY00 registered an increase of 1.8 percent, which was the lowest since FY68. Decline in the price of raw materials and building materials, and deceleration in food prices, played major role in pulling down the growth of WPI from 6.4 percent in FY99. The rate of WPI inflation was lower than CPI because of double digit declines in the prices of raw cotton and cottonseed, which are not captured by CPI but play a critical role in Pakistan’s manufacturing sector.

Table III.6
Distribution of Price Changes of 96 Commodities of WPI Basket

As shown in Table III.6, wholesale prices of 33 commodities decreased or did not change during FY00 (with a combined weight of 32.95), compared with 23 commodities in FY99 (combined weight of 21.16). Wholesale prices of 31 commodities recorded a subdued increase of up to 5 percent during FY00, compared with 36 commodities in the previous year.

Table III.7
WPI Basket Profile

Anatomy of WPI Basket
The profile of the WPI basket is shown in Table III.7. The WPI is based on a basket of 96 commodities of consumption and industrial use, which are either traded in wholesale markets, or supplied directly by producers to industrial users. With the exception of utilities, the WPI basket does not include services. Most of the 96 commodities are composite items; for example, rice, one of 39 commodities in the food group is a composite of 6 varieties. Similarly, motor fuel, one of the 8 commodities in the fuel, lighting & lubricants group, is a composite of two varieties of diesel oil and two varieties of petrol. In effect, coverage of WPI is much wider than 96 commodities that are listed. FBS collects prices from three different sources each week, on the basis of the following: (1) direct collection of prices by FBS field staff in 22 cities, (2) collection through 23 centers of the Agricultural Marketing and Grading Department, and (3) direct collection of data from importers, input suppliers, merchants and related associations.

Each month, specific prices of the 96 commodities are weighted by their share in the total marketable surplus, which broadly refers to the Rupee value of availability of these items in the wholesale market. More specifically, this refers to the production of the item (less in-house consumption) plus imports, if relevant. The weights are therefore an indication of the market availability of these producer items.

Sensitive Price Indicator
The Sensitive Price Indicator during FY00 registered an increase of 1.8 percent, which was the lowest since its inception in FY76. The slowdown in the growth of SPI (in terms of the twelve-month moving average), which started since November 1997, seems to be coming to an end. As shown in Table III.8, the SPI is based on a basket of 47 essential items of consumption. This is a subset of the CPI basket, formed by taking 34 items from food, beverages & tobacco, 7 from apparel, textile and footwear, 4 from fuel & lighting and 2 from the cleaning, laundry & personal appearance group. Unlike the CPI and WPI, the Sensitive Price Index is constructed on a weekly basis with a specific focus on families with a monthly income of less than Rs 1,500 per month. The objective is to capture changes in the cost of living affecting the lowest income group, and to track this as frequently as possible. For this purpose, 47 items are taken from the CPI basket, while coverage is restricted to 12 cities as opposed to 25 for the CPI.

Table III.8
Price Changes of 47 Items of Sensitive Price Indicator
(Percentages)

As shown in Figure III.2, during FY00, out of the 47 items, 14 items registered a decline or no change in prices compared with 10 last years. Prices of 19 items posted a subdued increase of up to 5 percent compared with 16 in FY99. This trend was reinforced by the fact that prices of 6 items showed a modest increase (in the range of 5 to 10 percent) in FY00 compared with 11 in the previous year. Furthermore, the price of 8 items increased in the double-digit range compared with 10 during FY99. It is important to note that the SPI basket does not include electricity, gas, and petroleum products. Since these utilities spearheaded the increases in the CPI, their absence resulted in a lower increase in the SPI.