Persisting inflation
According to a recent UN report, the specter of inflation continues to haunt Pakistanis, exacerbating their financial woes and adding to their everyday struggles. This pressing concern demands urgent attention from policymakers and concerted efforts to mitigate its impact on the population. The report highlights the predicament faced by ordinary Pakistanis, revealing that the cost of basic necessities, such as food, housing, education and healthcare, continues to spiral upwards. Inflation erodes savings, squeezes budgets, reduces purchasing power and forces individuals into difficult choices between meeting their basic needs or building a better future for themselves and their families.
The persistence of inflation can be attributed to a combination of factors such as: external debt, imbalance between supply and demand, inadequate local infrastructure, and a weak agricultural sector that hampers the country’s ability to produce enough food to meet the needs of its burgeoning population. External factors such as global commodity prices and exchange rate fluctuations further exacerbate inflationary pressures. Rising oil prices, for example, has had a cascading effect on transportation costs and, subsequently, the prices of essential goods and services. Pakistan’s dependency on imports for crucial items amplifies this vulnerability, making it challenging to control inflation domestically.
Addressing inflation requires a comprehensive and multi-faceted approach from the government. Apart from prioritising investments in agriculture, fiscal discipline is essential. Fiscal reforms should be implemented to enhance revenue collection, improve administration and reduce wasteful expenditures. Most importantly, the government should prioritise social safety nets and targeted subsidies to shield vulnerable populations from the harshest impacts of inflation. Pakistan finds itself at a critical juncture. Only prudent measures and careful considerations will pave the way towards a sustainable and stable future.
Published in The Express Tribune, May 20th, 2023.
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