ISLAMABAD, Feb 1: The government seems to have failed to step up its battle against rising prices as inflation entered a double digit growth in January 2012 from a year ago due to an unprecedented increase in oil cost and consumer demands.

An official of the PBS said that the rise in inflation is mainly driven by 14 per cent rise in energy prices in January. However, he admitted that fuel adjustments were also not calculated in the measurement of the monthly inflation.

The sudden rise in inflation has dampened the possibility of a revision in the interest rates. The central bank will announce the next monetary policy on February 11.

However, experts pointed out that no change would be made in the interest rate. The central bank kept the interest rate unchanged at 12 per cent on November 30, 2011.

The core inflation, excluding food and energy, rose to 10.12 per cent in January from 10.1 per cent in December. This slight increase will also dampen chances that the central bank may go for further lowering interest rate to spur economic growth.

Emerging economies like Indonesia, Thailand have also realised to lower interest rate to stimulate economic growth. However, India raised the interest rate to rein in the rising inflation.

For the first seven months, inflation reached 10.76 per cent, slightly over the government annual target of 9.5 per cent. However, PBS official said that government has revised its annual inflation target to 12 per cent.

At the same time, a weaker rupee will fan inflation, which is already over 15 per cent. The State Bank seems reluctant to intervene in the market to check the fall of the rupee.

It is expected that the rupee to depreciate against dollar as low as Rs96 to high of 100 plus by end of this year.

But contrary to this, food inflation recorded a single digit growth of 9.30 per cent in January, from a year ago. As a result, prices of non-perishable food items witnessed a surge of 9.86 per cent and that of perishable items 6.19 per cent.

But to produce feel-good figures, the government this year already reduces the food weight in CPI basket from 40.34 per cent to 34.46 per cent.

This reduction had helped government to minimise impact of surge in food prices on over all inflation.

During the month under review the prices of chicken up by (27.90 pc), condiments (27.34 pc), spices (27.32 pc), fresh fruits (25.23 pc), eggs (25.03pc), gram whole (23.80 pc), betel leaves & nuts (23.35pc), milk products (20.31 pc), milk fresh (18.74 pc) and milk powder (17.29 pc).