Pakistan has been grappling with galloping inflation for the past few years. Despite the government’s promises to control the prices, the inflation rate has only increased, making it difficult for the average citizen to make ends meet. Inflation has become a significant issue for the people of Pakistan, and it is high time the government took decisive steps to tackle the problem.
Inflation is a sustained increase in the general price level of goods and services in an economy over a period. In Pakistan, the inflation rate has been hovering around double digits for the past few years. According to the Pakistan Bureau of Statistics, the inflation rate in February 2023 was 11.6%. This means that the prices of essential goods and services have increased by 11.6% over the last year.
The reasons for inflation in Pakistan are complex and multifaceted. One of the primary causes of inflation is the increase in money supply. The State Bank of Pakistan has been printing more money to finance the budget deficit, resulting in an increase in the money supply. When there is too much money chasing too few goods and services, prices increase.
Another reason for inflation is the rise in the prices of commodities such as oil, gas, and wheat, which are imported into the country. The devaluation of the Pakistani rupee against the US dollar has also contributed to the rise in the prices of these commodities.
Furthermore, Pakistan’s economy heavily relies on imports, which are becoming increasingly expensive due to inflationary pressures in the global market. The pandemic has also disrupted supply chains, leading to a shortage of goods and an increase in prices.
The impact of inflation is felt by everyone in the country, but it disproportionately affects the poor and the middle class. The rising prices of essential goods and services such as food, fuel, and housing have made it difficult for the average citizen to make ends meet. According to a survey conducted by the Pakistan Bureau of Statistics, the poverty rate in Pakistan has increased from 24.3% in 2019 to 31.2% in 2023.
The government has taken some steps to control inflation, but they have not been effective in curbing the rising prices. The State Bank of Pakistan has increased interest rates to reduce the money supply, but this has not had the desired effect. The government has also imposed price controls on essential goods, but this has led to shortages and black markets.
One of the main reasons why the government’s efforts have not been successful is the lack of coordination between different government departments. The Ministry of Finance, the State Bank of Pakistan, and the Ministry of Commerce need to work together to develop a comprehensive strategy to tackle inflation.
The government needs to take bold and decisive steps to control inflation. One of the ways to do this is to reduce the budget deficit, which is a major cause of the increase in money supply. The government needs to focus on increasing revenue through taxation and reducing unnecessary expenditures.
The government also needs to work on increasing exports to reduce the trade deficit. This can be achieved by providing incentives to exporters and investing in infrastructure and technology to make exports more competitive.
Another step the government can take is to reduce the reliance on imports by promoting domestic production. The government needs to invest in agriculture, industry, and manufacturing to reduce the country’s dependence on imports.
The government should also work on improving the social safety net to protect the vulnerable sections of society from the impact of inflation. This can be done by increasing the budget for social welfare programs such as the Benazir Income Support Program and Ehsaas Program.
In conclusion, galloping inflation is a severe problem in Pakistan, and it is high time the government took decisive steps to tackle the problem. The government needs to adopt a comprehensive strategy that involves reducing the budget deficit, increasing revenue through taxation, promoting exports, investing in domestic production