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Inflation is sustained increase in general price level of goods and services in an economy over a period of time. It is defined as a persistent and more or less substantial decline in the value of money.
Inflation is a tax that erodes the purchasing power of the currency. Thus, the poor, who hold much of their assets in cash, bear this tax disproportionately, while the rich can partly evade it by holding assets that are return-bearing (like bonds), increasing in value (like land), or in a stable foreign currency.
Pakistan’s consumer price inflation rose in March to its highest since November 2013 and hits 9.41 percent which is the highest in past 5 years. Pakistan saw one of the most aggressive monetary tightening in Asia since the start of 2018, yet inflation could not be reined in. But with inflation consistently rising to reach a high of 9.4% since the tightening began; it is obvious that there is in fact no strong negative correlation between policy rate and inflation.
At the same time, according to the same report, IMF (International Monetary Fund) in its latest World Economic Outlook (WEO) report has downgraded economic growth projections for Pakistan to 2.9 percent for the current year.
Prices of basic commodities have been raised multiple times since the Pakistan Tehreek-i-Insaf came to power. The latest increase in food prices came just before Ramazan and the budget 2019 itself increased the prices of mainly all commodities.
The rising prices of petroleum products is the major cause of inflation. Prices of petroleum products also saw a massive hike last month, causing the price of petrol to increase thrice in a very short span of time. Inflation also affects stock exchange rates, demonetization of currency, causes increase in poverty; bring low quality of education system, and increases gold prices
After the PTI’s charge as government, the country is suffering from stagflation- that is from both high levels of inflation and unemployment, on one hand, and low economic growth, on the other; where the unemployment is expected to rise further in the wake of such weak performance on the economic growth front. Budget 2019 also brings a high inflation in Pakistan, more than 4 million people of Pakistan will reach under the poverty line and that means a huge destruction in our economy.
For the poor, if a rise in the prices of essential items increases their income can be a death knell, both literally (for subsistence households), and indirectly, due to the inability to afford needed medical and health spending. It can also force parents to choose between whether their child goes to school or works.
On the other hand, speaking at the floor of the House yesterday, PM Imran Khan has said it categorically that the mai reasons behyind eonomic crisis were money-laundering and corruption.
It can be rightly said that the Pakistan Tehreek-e-Insaf government has been working hard to tackle all the economic challenges since day one after coming into power. But at present no such satisfactory situation has reached. It can be hoped that in the coming years of the ruling government, the economic crisis would minimize upto maximum along with the eradication of poverty and paying off huge debts.