INFLATION IN PAKISTAN

 INFLATION
Inflation is an increase in the general price level of goods
and services in an economy over a period of time. The
demand-supply imbalance in the economy creates inflation.

 INFLATION IN PAKISTAN

Pakistan is the net importer of food and petroleum products. The surge in crude oil
prices due to the global crisis has resulted in double digit inflation in the country since
November 2021. The Pak-Rupee depreciation further amplified the prices of imported
items. The dollar appreciation is mostly driven by fundamental forces such as the
tightening of monetary policy in the US and the energy crisis.

. Additionally, the conflict between Russia and Ukraine has also caused major
disruptions to the supply of commodities as both countries are key exporters of energy
and agricultural products. Moreover, the recent floods have caused colossal damage to
the economy. The agriculture sector is the hardest hit sector. The floods have caused
massive supply disruptions of perishable essential items

 REASONS
Inflation in Pakistan, like in many other countries, can be attributed to a
combination of domestic and international factors. The exact causes and their
relative importance can change over time, but here are some of the key factors
that have historically contributed to inflation in Pakistan

 Cost-Push Inflation
 Demand-Pull Inflation Year wise CPI Inflation
 Exchange Rate Fluctuations
30
 Global Commodity Prices
25
 Monetary Policy
20
 Fiscal Policy
15
 Supply Chain Disruption
10
 Structural Issues
5
 Geopolitical Factors
0
2016- 2017-
17 2018- 2019-
18 19 2020- 2021-
20 21 2022-
22 2023

Year wise CPI Inflation

 EFFECTS
 Increase in Domestic demand
 Increase in net imports
 Rising trade deficit
 Rising import prices
 Indirect taxes

 CONCLUSION
Inflation effects the different sectors of the economy (Effects on the distribution of
income and wealth, Effects on production, Effects on the Government, Effects on the
Balance of Payment, Effects on Monetary Policy, Effects on Social Sector, Effects on
Political environment) and different classes of the people (Debtors & Creditors, Salaried
Class, Wages earners, Fixed income group, Investors and shareholders, Businessmen,
Agriculturists).A reasonable rate of inflation--around 3- 6 per cent-- is often viewed to
have positive effects on the national economy as it encourages investment and
production and allows growth in wages. When inflation crosses reasonable limits, it has
negative effects. It reduces the value of money, resulting in uncertainty of the value of
gains and losses of borrowers, lenders, and buyers and sellers. The increasing
uncertainty discourages saving and investment. Not only can high inflation erode the
gains from growth, it also makes the poor worse off and widens the gap between the
rich and the poor. If much of the inflation comes from increase in food prices, it hurts
poor more since over half of family budget of the low wage earners goes for food.

YEARS CPI FOOD NON-

FOOD
2008-09 17.0 23.1 13.4
2009-10 10.1 12.9 8.3
2010-11 13.7 18.0 10.7
2011-12 11.0 11.0 11
2012-13 7.8 7.1 7.5
2013-14 8.6 9.0 8.3
2014-15 4.5 3.5 5.3
 SHAHZEEN MALIK

FA23-PBPH-024

ICT ASSIGNMENT

JUNCTURE
19 SEPTEMBER 2023