Food share in monthly expenses rise Living condition of middle class deteriorating -Pakistan Press Foundation (PPF)

Paksitan Press Foundtion

Food share in monthly expenses rise Living condition of middle class deteriorating

ISLAMABAD: The share of food in the monthly per capita expenditure has increased by almost 5 per cent in four years — from 44.22 per cent in financial year 2007-08 to about 48.91 per cent in 2010-11 — indicating deterioration in the living condition of people in lower and middle classes.

According to official estimates, the average per capita expenditure of the rich in urban areas was more than four and half times that of the poor.

According to the Economic Survey of 2011-12 released a few days ago, the average per capita expenditure is almost the same for the poor in both rural and urban areas while for the rich class it is higher in urban areas, indicating that more wealth is concentrated in urban areas.

It said the expenditure on apparel, footwear, housing, education, transport, recreation and entertainment had shown a declining trend since 2007-08 while consumption expenditure on fuel and lighting, cleaning and laundry had shown an increasing trend.

As a result, food price inflation and slow growth over a number of years resulting from a combination of international and domestic shocks has led to a greater share of expenditures going to essential food, fuel and lighting etc. For food items, the major share of expenditure is incurred on wheat, milk, vegetable ghee, vegetables and sugar comprising 58 per cent of 82.52 per cent expenditure on 17 major food items.

Wheat continues to be the major expenditure item in both rural and urban areas and its percentage share in aggregate increased from 14.93 per cent in 2007-08 to 15.02 per cent in 2010-11.

Among the 17 major food items, milk continues to have a major impact with about 19.42 per cent of monthly expenditure in 2010-11 that has gone down from 20.33 per cent in 2007-08. That indicates that owing to low growth and limited fiscal space, the households are forced to spend more on wheat intake at the cost of milk consumption.

In rural areas, about 54.71 per cent of monthly expenditure foes to food, drinks and tobacco compared to 41.08 per cent in urban areas.

The government conceded that inflationary pressure on the economy increased over the last four years due to a combination of external and domestic shocks. Inflation which rose rapidly during 2007-08 by 17 per cent for the consumer price index overall and 23.7 per cent for food items respectively has now started to come down.

The rise in food price indices was mainly driven by food inflation, which rose rapidly during the last four years. Prices of basic food commodities like wheat, wheat flour, eggs, fresh fruits, chicken, potatoes, rice, vegetable and cooking oil rose sharply between 2008 and 2010.

While a sharp increase in world food prices and international oil prices since 2007 was mainly responsible for the escalation of prices, a number of domestic factors also contributed to the hike.

It said a 10 per cent increase in food prices was adding 2.2 per cent or 3.47 million to the population of the poor.