Inflation in Pakistan Essay - Reasons & Impact

Inflation in Pakistan Essay - Reasons, Impact & Conclusion | yourweb17

Inflation has long been a challenge for Pakistan's economy, but recent years have seen a particularly sharp rise in prices. This essay will explore the reasons behind this inflation, examining factors like global oil prices, government policies, and domestic demand. We will then delve into the impact of inflation on the lives of everyday Pakistanis, highlighting the struggles of low-income families and the dampening effect on economic growth. By understanding these causes and consequences, we can gain a clearer picture of the complex forces shaping Pakistan's economic landscape.

Introduction:

Inflation is a persistent increase in the general price level of goods and services over time. It results in a decrease in the purchasing power of the currency of Pakistan. Pakistan has long suffered from high inflation rates, significantly impacting the lives of ordinary citizens and the country's overall economic development.

Inflation in Pakistan:

Inflation Started in 2018 and continued until 2024. Pakistan experienced a period of inflation. During this time, the Consumer Price Index (CPI) rose by an average of 10–15% annually. The primary drivers of inflation in Pakistan are a sharp increase in energy prices, particularly for electricity and gas, coupled with rising food prices due to supply shortages and import hurdles.

Reasons for Inflation

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One of the huge reasons for inflation in Pakistan is the imbalance between the demand and supply of electricity and natural gas. Energy shortages have been a persistent problem in Pakistan, with inadequate infrastructure, mismanagement, and circular debt contributing to a lack of supply. Recently, the Pakistani government has raised the price of electricity and natural gas to cover the cost of imports and reduce the circular debt. It is causing an increase in inflation for businesses and households.

Increase in Price:

Although food prices have historically been relatively stable in Pakistan, they have increased significantly recently, resulting in a surge in inflation. The primary factor driving this increase is a shortage of commodity supplies and supply chain disruptions caused by the COVID-19 pandemic. The Pakistani government has attempted to maintain stability in the food markets through a combination of price controls, import tariffs, and subsidies, but these measures have been insufficient to alleviate the economic distress of consumers.

Impact of inflation:

The impact of inflation on the average person in Pakistan is an increase in the price of poverty in Pakistan. Many households struggle to afford necessities such as food, shelter, and healthcare, leading to further economic instability. In addition, inflation disproportionately affects the middle and lower classes, as they have a limited capacity to absorb the rising cost of living.

Conclusion:

In conclusion, inflation remains one of the significant economic challenges in Pakistan, holding back its economic development and the well-being of the people. To overcome this high inflation, the government needs to focus on increasing investment in energy and infrastructure development and creating a favorable environment for private investment. The government should also work to improve the Pakistani food supply chains to reduce import bottlenecks and mitigate future inflationary price pressures. If Pakistan successfully addresses this issue, it could play a critical role in Pakistan's overall economic growth and well-being.