KARACHI - The State Bank of Pakistan has said that contrary to the declining trend in the absolute poverty in Pakistan, the consumption inequality has increased; reflecting a rise in rich-poor divide. The Central Bank also expressing fear over inflation observed that recent surge in food and oil prices and slow growth of agriculture could affect the proportion, which may erode achievements in poverty reduction over the last few years. The SBP stated these facts in annual report released on Saturday. Report said that commonly used indicators for measuring inequality "gini coefficient and consumption expenditure ratio of highest to lowest quintiles", both reflected that consumption inequality at national level has increased over the years in Pakistan. The gini coefficient for Pakistan marginally increased to 0.3018 in 2006 up from 0.2976 estimated for 2005. Similarly, the ratio of the share of consumption expenditures of the highest to lowest quintiles also increased from 4.15 in 2005 to 4.2 in 2006. The ratio 4.2 indicates that the share of consumption of the richest top 20 percent of population is 4 times more than the share of consumption of the bottom 20 percent of the population (40.3 vs. 9.6 percent), report disclosed. As far as inequality in urban and rural consumptions is concerned, both indicators show that rural inequality declined in 2006 as compared to 2005 whereas urban inequality has increased during the same period. SBP said that the rise in consumption inequality was distressing; however, the government was of the opinion that a significant improvement in consumption inequality is possible only in the long run through creation of employment opportunities for the poor. For this purpose, the government has prioritized sectors like agriculture, small & medium enterprises (SMEs), and housing & construction. Along with long run strategy, in the short to medium term a targeted social protection strategy is being implemented to provide ad hoc support to poor and vulnerable segments of the society, report said. Depicting the picture of poverty SBP said, "In Pakistan, the latest available numbers indicate a modest improvement in the poverty level during 2005-06 as compared to 2004-05; however, the impact of double digit inflation observed in FY08 is likely to affect poverty adversely". During FY08, the CPI (Consumer Price Index) inflation was recorded at 12 percent; however, for the lowest income group it was 14.26 percent as compared to 10.71 percent for the highest income group, which shows that inflation affects the poorest segments with high intensity, report says. The other two poverty indicators i.e. poverty gap and severity of poverty also declined in 2005-06 as compared to 2004-05, SBP said, adding that these indicators improved at the national level as well as at the rural and urban levels. SBP further said the poverty gap has narrowed from 4.8 percent during 2004-05 to 4.0 percent during 2005-06 and severity of poverty has declined from 1.5 percent during 2004-05 to 1.1 percent during 2005-06. The urban poverty gap declined by 0.8 percentage point as compared to 0.6 percentage point decline in rural poverty gap in 2005-06 compared to 2004-05. Severity of poverty indicator reflects that rural decline in severity of poverty by 0.4 percentage point is higher than urban decline in severity of poverty by 0.3 percentage points. "There is fear that recent surge in food and oil prices and slow growth of agriculture could affect this proportion which may erode achievements in poverty reduction over the last few years", the SBP observed.