November 11, 2008	Tuesday	Ziqa'ad 12, 1429

ISLAMABAD, Nov 10: Inflation edged up to 25 per cent in October, nearing a three-decade high, against 9.31 per cent in the same month last year.

According to data released by the Federal Bureau of Statistics on Monday, the consumer price rose to an unmanageable level on the back of a 31.7 per cent surge in food prices and over 39 per cent increase in transportation fares, putting further pressure on the government to seek an immediate bailout package from the International Monetary Fund.

The government has projected a 12 per cent inflation target for 2008-09. The IMF expects full-year inflation to end at an average of 23 per cent.

The inflation rate, which is based on the consumer price index, went up to 24.64 per cent from July to October compared to a 7.67 per cent increase in the same period last year.

According to economists, the highest-ever increase in inflation might compel the State Bank to raise interest rates in order to receive the IMF package.

The fund has already attached the same condition with the loan extended to Iceland and Ukraine.

Although the prices of edible oil and crude had declined sharply in the international market, the headline inflation was not going to ease because the government was determined to raise utility tariffs, the economists said.

The figures showed that the non-food non-energy (core) inflation also reached an all-time high of 18.3 per cent in October compared to 6.5 per cent last year, despite tight monetary policy adopted by the central bank.

The core inflation is also rising on account of surging house rent and sub-indices related to medical care. The house index rent rose by 15.96 per cent and medical care cost by 12.49 per cent.

The food inflation increased to 31.61 per cent in October over the same month last year. Prices of non-perishable food items witnessed a rise of 37.07 per cent and that of perishable items 18.97 per cent.

The non-food inflation slightly decelerated to over 21 per cent in October over the same month last year. The government reduced prices of petrol by Rs5 per litre and diesel by Rs4. A further reduction is expected which would ease some pressure on the headline inflation.

Analysts said the inflation would remain on the high side for several months owing to increase in prices of wheat, sugar, etc, which might accelerate further in coming months.