KARACHI: Population in urban centres is poorer than rural dwellers in Pakistan, and the inequality is on the rise for the last 10 years.

This was revealed in the recently issued Annual Report of the State Bank.

The strange phenomenon is a clear indication of poor economic growth, costly living and burden of continued influx of population in urban areas from the poorest areas of the country.

“The distribution of both income and consumption is highly skewed in urban areas, and this inequality is rising over time,” said the State Bank report.

The report said that the top 20 per cent of urban households receive 60pc of total income, and contribute about 57pc of the total spending.

“In contrast, bottom 20pc of households share only 5pc of the total income and expenditures,” said the report.

The report reversed the traditional perception of the urban and rural divide on the basis of economic prosperity.

Since 2008, the country has been facing disastrous impact of poor economic growth which was on average below 3pc leaving millions of youth unemployed while no new jobs were created.

The unemployment on mass scale forced low income urban population into poverty while their savings vanished.

“Following savings and investment rates, Pakistan’s real GDP growth has also been the lowest in the region since 2008 onward,” said the report.

“A further analysis shows that the decline in saving rates is concentrated in urban households, as rural savings have increased during the last 10 years,” said the report.

Cross country comparison suggests that Pakistan’s national savings are the lowest in the region. Even Bangladesh, having a lower per capita GDP than Pakistan, has a higher saving rate.

In FY-13 national savings declined to 13.8pc.

“We found wide difference in savings rates of different income groups. The rich income groups (top 20pc) in both urban and rural areas are the most frugal with a savings rate of around 20pc,” said the report.

More alarmingly, the lowest income group (which used to save more than the middle income group in FY-02), is now under severe financial stress, as savings of this group have almost vanished in FY12, said the report.

“It appears that sharp increase in food inflation during the last several years has eaten up savings of the poor class,” said the SBP report.