Analysts say the surge in food prices could possibly lead to social unrest in case government did not make corrective measures to arrest the steady rise in prices. — File Photo

ISLAMABAD: Inflation in Pakistan is picking up as food prices up by over 17.58 per cent in July making eatables dearer for consumers, data showed on Tuesday, and pressure is mounting on the government to step up efforts to check rising prices. Driven by food and oil prices, the headline inflation, which is based on consumer price index, rose to 13.77 per cent in July over the corresponding month last year. The inflation leapt on the back of double-digit food inflation, rising oil prices in world market and spike in textile products, suggested data of Federal Bureau of Statistics.

Analysts say the surge in food prices could possibly lead to social unrest in case government did not make corrective measures to arrest the steady rise in prices.

The government has projected an inflation target of 12 per cent for the current fiscal year which seems to be missed because of rising food and fuel prices.

The world food prices also hit a record in recent months driven by rise in prices of wheat, sugar, corns and oils but experts pointed out three factors that contributed to high food prices in Pakistan.

They say only provincial government could play an effective role in stabilising food prices. “Federal government has no capacity to improve food supply in the villages and small towns of Pakistan,” they said, suggesting a provincial review committee on food prices headed by chief ministers.

But according to the experts, who also questioned the central bank policy of controlling food prices through tightening of monetary policy. In fact higher discount rate and inflation is positively related. However, the solution lies to bring down food inflation with augmenting the supply of food, improving governance and distribution networks.

Prices of non-perishable food items witnessed a surge of 17.65 per cent and that of perishable items 17.14 per cent in July over last year. Industrial goods have also recorded a tremendous increase during the month under review, belying the argument that the rise is seasonal.

The price of tomatoes up by (85.34pc), chicken (18.65pc), eggs (14.65pc), vegetables (14.38pc), potatoes (12.10pc), onions (9.55pc), gram whole (7.02pc), pulse gram (5.25pc), gur (3.91pc), besan (3.75pc), sugar (3.07pc), wheat (3.06pc), rice (2.94pc), wheat flour (2.74pc), fresh fruits (2.21pc), maida (1.60pc), milk products (1.44pc), beverages (1.28pc), and milk fresh (1.20pc).

On the other hand, the central bank has decreased its discount rate to 13.5 per cent from 14 per cent on the back of two assumptions. One the headline inflation would not exceed 12pc and second, government would restrict its domestic borrowings for financing fiscal deficit.

But contrary to this, the non-food and non-energy core inflation entered a double digit to 10.7 per cent in July from 10.3 per cent last year making it harder for the central bank to further bring down the interest rate in the next monetary policy review.

However, the house index rent rose by 8.79 per cent and medical care cost by 17.34 per cent in July over the same month last year. The transportation fare increased by 13.61 per cent during the month under review over the same month last year. The rise in transportation fare was driven mainly by the increase of diesel, petrol and CNG filling charges.

The statistics showed that the inflation measured through sensitive price index up by 17.34 per cent in July showing an upward trend in prices. The inflation in the wholesale manufactured products also witnessed highest ever increase by 21.13 per cent over the same month last year.