ISLAMABAD, Oct 29: Food inflation surged by 13 per cent in September over the same month last year. A finance ministry report said the highest ever increase in food inflation in any month of the fiscal year 2007-08 was due to an extraordinary surge in demand, particularly for fruit, vegetables, milk, meat, poultry and cooking oil during Ramazan.

A sharp rise was also witnessed in wheat and flour prices, driven by extra-market forces. Although, the prices of wheat and flour have declined lately, their contribution to inflation was already realised.

According to the report, food inflation increased slightly to 10 per cent in the first quarter (July-Sept) of the current fiscal year as against 9.9 per cent in the same period last year.

The Ramazan-Eid effect was expected to wear off in November and food inflation was likely to show declining trend thereafter, it said.

The report said the overall consumer price index (CPI)-based inflation registered a decline while the overall inflation fell to 8.4 per cent in September as against 8.7 per cent in the same month last year.

The decline in overall inflation is attributed to a 5 per cent reduction in non-food inflation against 7 per cent in September last year.Core inflation (non-food non-energy) also stood at 5.4 per cent as against 6.2 per cent in September last year. Tight monetary policy pursued by the State Bank of Pakistan is mainly responsible for this decline.

Food inflation has emerged as a major source of concern for the policy-makers in emerging Asia, including Pakistan. Food prices rose at an average of 10.1 per cent and contributed 55 per cent to overall inflation in Asia ex-Japan. The upward trend in food prices is most evident in China (18.2 per cent), India (8.4 per cent), Indonesia (13 per cent) and Pakistan (13 per cent).

During the July-Sept period of 2007-08, average inflation stood at 7 per cent as compared to 8.4 per cent last year. Core inflation was 5.3 per cent as compared to 6.6 per cent and non-food inflation averaged 4.9 per cent as against an average of 7.3 per cent in the same period last fiscal year.