June 09, 2007	Saturday	Jamadi-ul-Awwal 23, 1428

ISLAMABAD, June 8: Price hike in Pakistan has hit hardest the poorest section of the population living on less than Rs3,000 per month, says Economic Survey 2006-07.

Data pertaining to inflation rate for various income groups reveal that the increase of 7.9 per cent in Consumer Price Index (CPI) during 2006-07 was largely borne by lower income brackets.

Rising prices reduce the purchasing power of the average consumer, particularly the poor.

Category-wise increase in inflation rate in the case of lowest income group up to Rs3,000 per month was 8.3 per cent and lower income group up to Rs5,000 per month was 8.1 per cent, which is larger than the increase in overall CPI.

Whereas in the case of middle income and upper income brackets, average increase in inflation was at 7.8 per cent and 7.3 per cent, respectively, which indicates that inflationary incidence was highest for lowest income groups and lowest for highest income groups.

The higher incidence of inflation in case of lower income groups is likely due to the fact that lower income groups spend larger shares of their income on food, which has been the driving force in inflation in the current fiscal year.

The survey says that the CPI-based inflation during July-April 2006-07 averaged 7.9 per cent as against 8 per cent in the same period last year. The single largest component of the CPI is the food group, which showed an increase of 10.2 per cent.

On the other hand, the non-food prices grew at a slower pace compared to last year. The non-food inflation averaged 6.2 per cent between July -April 2006-07 while it stood at 8.8 per cent in the corresponding period of last year.

The non-food non-energy inflation (core inflation) decelerated sharply to 6 per cent in first 10 months of the fiscal year as against 7.7 per cent in the same period last year.

A more detailed analysis of the food group shows a considerable variation in inflation rates of the items included in the group. For example, considering the perishable and non-perishable items in the food group separately shows that non-perishable food prices rose by 9 per cent while the perishable items prices grew by 17.6 per cent.

An analysis of individual food items suggests that the major portion of food inflation during the current year stemmed from a limited number of items including rice, edible oil, pulses, meat, milk, tea, eggs, wheat, vegetable and fruit.

These items have experienced relatively larger increase in their prices during the course of 2006-07. However, prices of other important food items like sugar, potatoes, tomatoes, moong pulse and chicken (farm) have shown a decline in their prices owing to improved availability of these items in the market.