February 12, 2008	Tuesday	Safar 04, 1429

ISLAMABAD, Feb 11: Food inflation in the country ballooned to 18.25 per cent in January, and it was the highest-ever monthly increase in the recorded history which hit the low income group, reducing their purchasing power.

The overall inflation, measured through consumer price index (CPI), also increased substantially which witnessed a double digit increase of 11.86 per cent in January over last year.

An increase of 1.91 per cent was recorded in the CPI over the previous month, showing an upward trend in prices, says the data issued by the Statistic Division on Monday.

Food inflation was at 12.2 per cent in December 2007, which slightly came down from 14 per cent in the previous month. The double digit inflation in food items was being witnessed since September 2007.

Another crushing blow to millions was the continued rising medical expenses which in January increased by 7.46 per cent. Similarly, the house rent went up 9.47pc over last year.

Despite their adverse impact on the people from the low-income group, the steps taken by the government failed to reverse the trend so far, except the tightening of monetary policy by the State Bank of Pakistan (SBP) to curb the growth in the core inflation.

Economist Dr A R Kemal told Dawn on Monday that with over 19.5 per cent increase in the money supply means that the average annual inflation would be in the double digit.

The government had projected 6.5 per cent inflation target which even was not realistic for projection. The inflation in the first seven months reached 8.56 per cent this year, up from 8.14 per cent during the same period last year.

It is not just food that is getting more expensive, the wholesale-price index (WPI), the most commonly used measure, rose to 15.53 in January, and again there was a highest-ever increase in the history. The WPI depicts an increase in the wholesale prices of more than 425 items.

Having raised the interest rate many a times to curb the core inflation, the SBP governor had recently warned that an increase in the government borrowings would become one of the reasons for an increase in the core inflation.

Had the monetary policy not been tightened, the overall inflation would have been much more than the existing one.

Similarly, as the government had frozen oil prices in the domestic market, it also helped control non-food inflation, which stood at 7.3 per cent in January 2008.

If there was an increase in oil prices, the non-food inflation would have easily touched the double digit figure.

Prices of food items were pushed up by low wheat production and the prices rose by nearly 60 per cent in the last few months. Though the government banned wheat exports and also imported the commodity to control rising prices, it did not help the end consumers.

To have cheaper flour, Pakistan’s masses must hope for a decent wheat harvest next season.

Edible oil prices have also been shooting up by as much as 100 per cent in a year which are rising further on the back of rising palm oil prices.

The food items which witnessed an upward trend included maida, wheat, wheat flour, spices, mustard oil, cereals, vegetable ghee, readymade foods, sweetmeat and nimco, pulse masoor, pulse gram, fresh fruits, rice, dry fruits, condiments, bakery and confectionery, cooking oil, baisan, fish, milk fresh and eggs.