KARACHI, Nov 18: High inflation continued to prevail during October 2006, while the killing food inflation remained in the double digits hurting the poor more than the rich of the country.

The State Bank issued its monthly “Inflation Monitor” on Saturday, which showed that despite a slight dip the Consumer Price Index (CPI) remained above 8 per cent.The food, which is the main source of concern for the public, was still in double digits.

The State Bank said that the inflationary pressure decelerated during the month of October 2006. But at the same time it said that the food inflation was still showing a double digits growth despite witnessing a lower growth compared to the last two months.

In general terms, inflation means price increase and 10.5 per cent food inflation means that the food prices increased by 10.5 per cent.

The CPI showed a growth of 8.1 per cent in October 2006, which were 0.6 percentage points lower than the CPI year-on-year (Y-o-Y) growth in preceding month and 0.2 percentage points less than the same month last year.

“Due to persistently high inflation during the last three months of the current fiscal, the contribution of food group in overall inflation increased significantly to 52.4 per cent in October 2006, from 31 per cent during FY06,” said the SBP report.

The SBP report said the pressure on food inflation still exists, which is also evident from a considerably high rate of growth in SPI (Sensitive Price Index)--an abridged basket of consumer goods consisting mostly of food items.

Like in the last month of September, food inflation was recorded in double digits at 10.5 per cent Y-o-Y in October 2006.

Inflation is a tax and the poor in the country is paying the highest as is obvious from the SBP report.

“The income-group-wise inflation continued to follow the similar pattern of last two months i.e. the highest income group experiencing inflation lower than average and the lowest income group facing inflation above the average,” said the SBP report.

The report also showed that the wages of skilled and non-skilled labourers were not growing to face the challenge of inflation.

The SBP report said that the wage inflation--that started declining from the start of FY0--continued its decelerating trend in October 2006 resulting from lower wages of both skilled and unskilled workers on account of slow down in construction activities.

Average wages of the skilled labour registered a lesser Y-o-Y growth of 12.6 per cent compared with 14.8 per cent in the preceding month and 16.5 per cent in the corresponding month last year.

While the real wages of skilled workers kept on declining during October 2006, the unskilled workers’ real wages turned up in the month under review. Skilled and unskilled workers registered a real wage inflation growth of 4.4 and 8.1 per cent, respectively, compared to 7.7 and 14.1 per cent growth in the corresponding month of last year.

The province-wise data reveals that the NWFP experienced the highest inflation for all income groups except for the highest income class. For the highest income group, Islamabad is depicting the highest general CPI inflation. However, food inflation in the NWFP remained higher even than Islamabad.

Core inflation measured as non-food non-energy (NFNE) was recorded at 5.7 per cent in October.

Non-food inflation has declined significantly to 6.4 per cent in October, 2006--the lowest level for the last two years. In August and September 2006, the non-food inflation was recorded at 7.4 and 7 per cent, respectively.