Inflation in Pakistan

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Inflation in Pakistan is increasing once again, over the last 3-month the prices of most commodities reached soar. Almost everything the people eat, use, and wear became expensive significantly, thus adversely affecting the low-middle-income household. Furthermore, the prices of food products such as edible oil, ghee, sugar, vegetable, and pulses as well as other daily essential products have been surpassed precariously. The per kilo price of vegetable ghee has risen 27 percent every year on average for the last three years. The prices of cooking oil, sugar, and pulses have surpassed 23%, 22%, and 21% respectively, every year since Oct 2018. Veteran economists see the factors behind the inflation in Pakistan as, the deteriorating exchange rate, escalating international commodity prices, and increasing the prices of energy. Usually, high international prices of commodities, such as petroleum products and palm oil, have contributed robustly to food inflation in the local market. The rupee devaluation also led to an intolerable rise in domestic prices of most important products like petroleum products, electricity gas, and edible oil became very expensive in Pakistan, thus leading to high inflation. The spillover effect of the devaluation of the rupee has affected the prices of goods in Pakistan, the electricity price per unit has gone up from 2 to 6(200%) for lifeline consumers, and from 8 to 24(200%) for medicines price have risen in the range of 250% to 400%. The petrol price has soared to Rs. 150.37 per liter. Moreover, the foreign debt has increased. High inflation is horrendous for our fragile economy. In Pakistan, inflation is a socio-economic problem therefore, it is mandatory to address it through a comprehensive and effective socioeconomic response and lucid implementation mechanism on the ground. In addition, we need to elucidate the consumers to act rationally and eradicate the concept of “me-too spending syndrome”. Otherwise, the shoe leather costs would be high, which will hurt the consumers more.

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