Ill-effects of inflation

Announcements regarding the rupee’s devaluation against the US dollar and its implications are perturbing. They will impact all consumers. The devaluation of the Pakistani rupee to 115.4 against the dollar is going to result in all-round inflation of prices across industries. The disconcerting factor this time around is how fast the rupee depreciated since only a few months ago, undergoing a decrease rate of 9.4 per cent since December 2017. We implore our economic managers not to put more pressure on the common man.

For low-income segments of the population that already live hand-to-mouth, poverty should see an increase as a result of inflation. As usual, members of low socio-economic classes experience the most hardship from the country’s vast problems, be they health, security, education or economy. Expecting any kind of mercy from leaders in the way of subsidies or handouts is lofty. We know this from past experience where inflation has been consistently on the rise with little respite.

As for the economy, local and imported goods will become costlier due to taxation, supporting the black economy of smuggled goods in the case of the latter. As a result, the prevalence of corruption will grow as traders explore shortcuts. Claims by the prime minister’s adviser on finance last week regarding economic stability are starkly contrasted with this week’s headlines about rupee devaluation and inflation. Confidence in his statements is shattered considering that with a weaker rupee and stronger dollar, development projects will become more expensive, gross official reserves will decrease and foreign debt liabilities will grow. Notwithstanding, while the focus largely remains on inflation and the change in prices within various industries from automotive to basic commodities, political leaderships must alleviate the struggles of the common man, particularly those from the middle and lower income strata of society.

Published in The Express Tribune, March 26^th, 2018.

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