ISLAMABAD, Nov 12: Inflation in Pakistan rose at a slower pace in October due to a slight fall in food prices and the effect of a higher base last year when prices started rising , official data showed on Thursday.

The consumer price index rose 8.70 per cent on year in October, slower than September's 9 per cent. October's CPI rise was also above market expectations of a rise of 8-8.5 per cent, analysts said. Month-on-month, the overall CPI rose 1.19 per cent compared with a gain of 0.38 per cent in September.

In October, the heavily weighted food and beverages component of the CPI basket rose 12.26 per cent on year, compared with 13.13 per cent in September. Food and beverages account for over 40 per cent of the total weight of the CPI index. Housing rents, another important component of CPI, continued to rise, climbing 10.76 per cent in October, compared with 10.17 per cent in September.

In the first four months of the current fiscal year that began July 1, consumer prices rose an average 9.06 per cent, suggesting the government could have difficulty meeting its full year inflation target of 5 per cent.

The inflation rate was 4.57 per cent in the last fiscal year. Pakistan's central bank has been tightening monetary policy since July to curb rising inflation, which it said was mainly due to an increase in food prices.

However, analysts said the October data indicate the rise in food prices may moderate further from here. "We may see a further fall in prices due to the government's effort to increase wheat supplies in the market," said Mohammed Sohail, research head at Investcap Securities.

The government plans to import 500,000 tons of wheat soon to overcome local shortages and stabilize prices. The country has been reluctant to boost interest rates sharply despite rising inflation because it fears higher borrowing costs could jeopardize an economic recovery.

In the last fiscal year, relatively low lending rates helped underpin growth in both the industrial and consumer sectors. The government is aiming for 6.6 per cent growth in gross domestic product in the current fiscal year, up from 6.4 per cent last year. - Dow Jones Newswires