Headline inflation, an indicator of the cost of living, rose for the second successive month to 22.3pc, marking the highest figure of the new fiscal year.

Measured by the Consumer Price Index (CPI), the average rate of increase in the price of goods and services depicts a 0.7-percentage-point rise from the previous month, according to the latest data from the Central Statistical Agency (CSA).

Primary upward pressure came from a surge in food product prices, mainly cereals and vegetables. The rate is more than double the figure that the government targeted for the current fiscal year.

For the newly started budget year, the Ministry of Finance intended to control the headline inflation rate to single digits at 9.8pc. This is despite the 19.9pc annualised average inflation rate that was registered in the recently ended fiscal year.

In July, food inflation registered an almost two-percentage-point rise, while non-food inflation has shown a slight dip of 0.8 percentage points.

Vegetables - onions, potatoes and tomatoes in particular - registered a rapid surge in their prices and tended to drive up overall food inflation. The cost of black pepper also continued to rise last month following the trend of previous months, according to the report.

Since May, the prices of onions and tomatoes, which are widely consumed in many households throughout the country, have doubled. Currently, onions and tomatoes are sold at 30 Br and 28 Br a kilogram, respectively.

The rise in inflation in the non-food component is steadily increasing due to soaring prices for alcohol and tobacco, khat, housing repair and maintenance, energy, transportation and medical care.

On a month-to-month basis, which measures the price change between the two latest months, inflation rose by two percent from June to July.

On top of eroding consumer purchasing power, the higher inflation rate is causing macroeconomic imbalances, according to Ahmed Shide, minister of Finance, speaking at a discussion over the 10-Year Development Plan that was designed by the National Planning & Development Commission.