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Pakistan inflation rises to 7.77pc

ISLAMABAD — The annual inflation in Pakistan rose to 7.77 per cent by end June 2007 as against the target of 6.5 per cent due to huge price hike in food items, according to the Federal Bureau of Statistics (FBS).

The inflation measured through consumer price index (CPI) target has been missed for the second consecutive year mainly due to government's failure to ensure smooth supply of the essential food items despite the tight monetary policy of the State Bank of Pakistan. Led by a 9.68 per cent increase in food inflation, the over all consumer prices jumped to 7 per cent in June 2007 over the same month of the last year's target which is still unbelievable to be achieved during the month under review. The statistics indicated that the inflation went up by 0.20 per cent in June 2007 over May 2007.

The lowest growth in inflation was recorded in the month of January at 6 per cent followed by 7.39 per cent in February 2007, the lowest ever growth in any month of the current fiscal year and the government had attributed this fall to its economic policies. Otherwise, the average inflation remained at around 8 per cent during the year 2006-07 over the last year even though the economic wizards of the current government had claimed to have controlled the rising inflationary pressure in the economy. The food inflation was pushed by highest ever increase in the price of essential items like potatoes, eggs, rice, milk powder, cigarettes, vegetable ghee, condiments, spices , mustard oil, beverages, milk fresh, milk products, pulse masoor, sweetmeat & nimco, cooking oil, wheat flour, wheat, pulse moong and readymade food.

Apart from the increase in food items, the medicare charges and education went up by 9.85 per cent and 6.41 per cent respectively in June 2007 over the same months of the last year. This indicates that the charges of the basic facilities like life saving drugs and education fees prices sky-rocketed thus affected the monthly budget of the poor people. The government had frozen the oil prices in the domestic market for the last couple of months, which had also resulted into lowering the transportation cost and fares. With this the non-food inflation also witnessed steep decline during the month under review.

This freezing of oil prices resulted in stabilising the prices of transportation which recorded a negative growth of 3.06 per cent in June 2007 over the same month of the last year. Had this prices been brought down to international level its impact could have been much more. Prices of cloths increased by 7.25 per cent, house rent 6.73 per cent, household goods 5.80 per cent and fuel and lighting 6.07 per cent in the month of June 2007 over the same month of the last year.

Analysts said that the core inflation non-food-non energy remained within four per cent during the year under review due to the SBP tight monetary policy. Now it depends on the mood of the SBP whether they would go for some relaxation in the monetary policy so that to bring down interest rate. They said government should control inflation through ensuring the supply of food items rather to keep highest ever interest rates as compared to the neighbouring countries for controlling inflation.