February 17, 2007	Saturday	Muharram 28, 1428

ISLAMABAD, Feb 16: The government will ensure supply of essential food commodities for achieving the overall inflation target of 6.5 per cent projected for the current fiscal.

With recent improvement in supplies, the prices of food commodities have started declining. With food inflation expected to decelerate and core inflation already trending downward the overall inflation target is likely to be achieved.

A fact-sheet on inflation issued by the finance ministry here on Friday said that the overall CPI-based inflation registered a sharp decline in January 2007 as compared to the previous month and the corresponding month of last year.

The overall inflation declined to 6.6 per cent in January 2007 as against 8.9 per cent in December 2006 and 8.7 per cent in January 2006.

The decline in overall inflation in January this year is largely attributed to a sharp reduction in food inflation which declined from 12.7 per cent in December 2006 to 8.7 per cent. Notwithstanding a sharp decline in food inflation in January 2007, it is still slightly higher than the January 2006.

Non-food inflation also exhibited the same declining trend and stood at 5.2 per cent in January 2007 as against 6.2 per cent in December 2006 and 9.1 per cent in January 2006.

Core inflation continues to exhibit a steady decline it fell to 5.1 per cent in January 2007 from 5.7 per cent in December 2006. Tight monetary policy pursued by the State Bank is mainly responsible for secular decline in core inflation.

During July-January 2006-07, the average inflation stood at 8.1 per cent as compared to 8.4 per cent last year. Non-food inflation declined to 6.6 per cent as compared to 9.0pc and core inflation averaged 5.9 per cent as against 9.2 per cent in the same period last year.

Food inflation on the other hand witnessed increase during the period under review. It was 10.3 per cent in the first seven months of FY07 as against 7.6pc in the same period last year.

The major contributor to the sharp pick up in food prices include the rise in the prices of various kinds of pulses; sugar, milk, meat, chicken, potatoes, tomatoes, onion, beverages etc., on account of imbalance in the demand and supply of these commodities.