INFLATION IN PAKISTAN

Pakistan has struggled with high inflation in recent years. Inflation reached a peak of 14.6% in2018 and has remained relatively high since then. In Pakistan people’s party government inflation was high due to expansionary fiscal policies which led to an increase in the money supply. Also oil prices were raised internationally and Pakistani rupees depreciated.
Annual inflation in Pakistan climbed to 24.5% in December this was the highest it has ever been. It was 23.8 percent in November. Food prices climbed to 35.5%, which were 31.2% in previous month. There was a huge increase in the prices of onion (415%), wheat (57.3%), tea (63.8%), eggs (54.4%), gram whole (53.2) and rice (46.6%). Transport costs increased to 41.2% against 44.2% in last month, motor fuel to 49.95%, clothing and footwear up to 17.1% . There was an increase of 0.5% in CPI (Consumer Price Index) than previous month.


The prices of flour have also increased too much in the last few days. The new price is 160 per kg. 20 kg bag now costs at Rupees 2500 and 50 kg at Rupees 6000. According to sources, President Aftab Gul chaired a meeting of Muttahida Non Roti Association, in which the increase in the price of Naan and Roti due to the rising prices of different types of flours was discussed. Roti should be Rupees 35 and Naan Rupees. 40, And if naan is to be sold cheap then cheap flour should be provided on the oven. The price of chicken has raised to 800 per kg in Rawalpindi while 600 in Gujranwala and 640 per kg in Karachi. 

The federal government is blaming the provincial governments for the inflation. According to Tariq Basheer Cheema, provincial governments sets the prices of food items and they control it. While the provincial government are blaming the federal government.

Some of the factors that have contributed in inflation include rising fuel prices, increasing food costs, and a depreciation of the Pakistani rupee.

Increase in oil prices:

Oil prices have an important role in increasing inflation specially food inflation. High oil prices causes the shipment costs to increase. It also increases the cost of production of crops due to its use in agricultural sector.

Cost of production:

Increase in oil prices have badly affected the cost of production. The increase in costs of pesticides, agricultural machinery, transportation and seed etc. has directly increased the cost of production. Also we imports DAP (Di-ammonium Phosphate) fertilizers at high rates.

Currency devaluation:

It plays a crucial role in inflation. Political instability in country in the past few months has caused the rupees to depreciate and dollar rates have increased . we import most of our food items so high dollar rate have caused a high inflation rate. We import crude oil, poultry foods, pesticides and other routine use things.