March 28, 2007	Wednesday	Rabi-ul-Awwal 8, 1428

KARACHI, March 27: Why poverty is rising despite high growth in the country is obvious from the State Bank’s latest report which says that the extent of one-month (February 2007) increase in food inflation is close to five-times of the five-year January-February increase.

This calculation showed that the buying power of poor eroded by the sudden rise in food prices, which is the basic real cause of unchecked multiplying poverty growth.

The SBP issued “Inflation Monitor” on Tuesday which said that year-on-year the CPI inflation rates in February 2007, when compared with the rates in January 2007, showed upward movements in overall inflation as well as in its two broad components of food and non-food inflation.

“This is mainly due to an unusually high one-month increase (February over January) in CPI and its components. Overall CPI increased by 1.0 per cent, which is twice the five-year average of January-February increase,” said the SBP report.

It said the increase in one-month non-food inflation is one-third higher than the respective five-year average.

The food inflation rose to 10.0 per cent in February 2007 from 7.5 per cent last year. The food inflation was also higher than January when the food inflation was 8.7 per cent.

January was the only month after August 2006 when the food inflation slipped to single digit but in February it again reached double digits.

The headline CPI inflation though declined to 7.4 per cent in February 2007 on year-on-year (YoY) basis from 8.0 per cent registered in the same month of last year, but rose against 6.6 per cent in January.

The main contributing factor for this rise was food inflation which was 1.3 percentage points more than that of the previous month. Non-food inflation also increased and was recorded at 5.6 per cent.

The increase in YoY inflation is due to a rise in prices of some major food items and some components of fuel & lighting group, specifically electricity charges, said the report.

The contribution of food items in the basket of CPI has been increasing and has gone almost by 45 per cent since last year.

The report said the contribution of food group in overall inflation was 55.4 per cent in February 2007 which was marginally higher than that of January 2007 (1.6 percentage points), but was significantly higher than 38.3 per cent contribution of food during the corresponding month last year.

Like food inflation, non-food inflation also increased from 5.2 per cent in January 2007 to 5.6 per cent in the month of February 2007. This marginal rise in inflation is primarily due to an increase in almost all groups of non-food group including fuel & lighting, apparel, textile & footwear, education, house rent index, household furniture & equipment, transport & communication, cleaning and laundry & personal appearance.