Imagine you are a worker on minimum wage with a family to support, making around PKR 20000.00 a month. You want to provide for that family, but you are confronted with the sharp reality of inflation. The 20 kilo bag of flour you paid for has increased to almost double. As have all the other staple food items not to mention household products. School fees have increased as has electricity and fuel. You have to choose between feeding your family, or paying your other bills.
This stark scenario is being played out across Pakistan today. Figures from the Pakistan Bureau of Statistics reveal that in the three years of the current PTI government, inflation has doubled. Food prices have become unaffordable for many people, as have the costs of utilities, shelter, and other essentials.
When the PLM-N came to governance in 2013, the nation’s inflation rate lay at 7.41%. By the end of the PLM-N tenure in 3018, this inflation was reduced by almost 50% to 3.9%. In contrast, during the first year of the PTI administration, inflation rates rose to 7.3% – almost what it was pre-PLM-N. In PTI’s second year of governance this further escalated to 10.8%. In September 2021, Pakistan’s inflation rate was 8.8%. Pakistan has the highest rate of inflation in South Asia and one of the highest in the world. India, Bangladesh, and Afghanistan have inflation rates of 5.2%, 5.5% and 5.3% respectively.
The Economist recently declared Pakistan as one of the most expensive countries to live. They ranked Pakistan at number four out of forty-three countries.
In September 2021 the urban Inflation rate for Pakistan lay at a whopping 9.1%, while rural inflation lay at 8.8%. For a nation where a significant portion of the population is barely managing to sustain a standard of living at or above the International Poverty Line, this is dire. We can expect a portion of them to join the millions of others in Pakistan who fall below the International Poverty Line.
Inflation is impacting all aspects of life. In July of 2018, the price of Brent Crude Oil was USD 85.00 per barrel, and Pakistan was selling it at PKR 90.00 a litre. Compared that to today, when Brent Crude Oil sells for USD 84.80 per barrel, and cells at PKR 137.00 per litre. That is an increase of over 50%.
An increase in fuel cost results is an increased burden on the pockets of the people. Transport. Production, electricity and more all increase in cost. For consumers a simple matter of whether they can afford to commute to work, or pay for their groceries are now urgent issues. Basic food items have gone up in cost significantly: lentils 50%, sugar 83%, wheat/flour 56%, rice 32%, ghee/oil 93%, salt 159%, meat 48%, dairy 36% and vegetables (garlic, onion, potato and tomato) 89%.
One of the main reasons for the increasing oil prices is the rapid depreciation of the Pakistan Rupee. The Pakistan Rupee lost PKR 17.36 in four months to become the worst performing currency in Asia. This though doesn’t fully explain the LNG fiasco, where Pakistan LNG Limited cancelled tenders for LNG at USD 13.78 per MMBtu. The firm estimated that international LNG prices would decrease, a financially disastrous risk to have taken. Pakistan LNG Limited was forced to buy half the amount at USD 15.49 per MBBtu.
Financial mismanagement and a severe lack of balance of trade make inflation a burden that is falling upon the shoulders of the people, affecting especially those who are barely sustaining a basic livelihood.
Pakistan cannot afford nor does it deserve financial experimentation and mismanagement. Strategic, precise and clear planning is the need of the hour if Pakistan is to survive this bleak period.
