Dec. 11 (Bloomberg) -- Pakistan's inflation unexpectedly slowed in November as food costs declined, giving the central bank room to hold interest rates at a six-year high.

Consumer prices jumped 8.67 percent from a year ago, after rising 9.3 percent in October, the statistics bureau said in Islamabad today. Economists were expecting a 9.05 percent gain.

``There was a patch of declining prices which helped cap inflation,'' said Asif Ali Qureshi, head of research at Invisor Securities Ltd., in Karachi. ``There are still chances of an increase in fuel prices which means there could be some further tightening of monetary policy.''

Higher global crude oil costs may force the government to increase local pump prices, fuelling inflation. Pakistan has subsidized oil-product prices since March 2004 to shield consumers from record energy costs and curb inflation.

Crude oil reached $99.29 a barrel on the New York Mercantile Exchange on Nov. 21, the highest since trading began in 1983.

Food and beverage prices fell 0.57 percent last month from a year earlier, according to today's report. Inflation was at a 29-month high in October because food prices rose 14 percent that month.

Pakistan's central bank unexpectedly increased its benchmark interest rate by a half-point to 10 percent on July 31, citing a ``worrisome'' rise in food costs. The next monetary policy statement is due in January.

Increased Subsidies

Former Prime Minister Shaukat Aziz raised salaries and pensions and increased subsidies on basic foods including tea and cooking oil in this year's budget, aiming to allay voter concerns about escalating prices ahead of the election.

The government expects the $146 billion economy to expand 7.2 percent in the fiscal year ending June, accelerating from 7 percent in the previous 12 months. Aziz, whose term ended Nov. 15, says annual growth of as much as 7.5 percent may be achievable in the next four years.

Pakistan opposition leaders Benazir Bhutto and Nawaz Sharif have both cited runaway food prices in their campaigns against President Pervez Musharraf, who last month imposed emergency rule and has called an election for Jan. 8.

To contact the reporter on this story: Farhan Sharif in Karachi at fsharif2@bloomberg.net;

Last Updated: December 11, 2007 07:48 EST