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Inflation explained

2025-03-13
EVERY day one reads about inflation going down in Pakistan to a single digit, month on month or year on year, and this fact is hyped up by the authorities.

The other more important fact that is a matter of continuing concern for thevast majority of the people is that while inflation has come down, prices have remained high and continue to go higher.

The above fact is explained by a simple illustration which can easily be understood by a layperson. The latest inflation projection of around four per cent is on the already highly elevated prices.

Since inflation for the fiscal years ending June 30, 2023, and 2024 was around 29pc and 25pc, respectively, product A, which cost Rs100 on July 1, 2022, would have gone up to Rs129 by June 30, 2023, and to Rs161 (25pc over Rs129) on June 30, 2024.

To this price (Rs161), one has to add the current inflation (4pc), and the price of product A would stand at Rs168.

So, while earnings and purchasing power continue to dwindle for most segments of the population most certainly for the middle and lower class, as well as for retired persons like me product A priced at Rs100 on July 1, 2022, is now available at Rs168; an increase of 68pc. This is why products A to Z remain beyond our reach.

Moin Mohajir Karachi