Pakistan’s Weekly Inflation Surges Over 42% as Wages Remain Stagnant
Published on: December 23, 2023.
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Pakistan Weekly Inflation Rises Over 42% Amid Stagnant Wages
Inflation in Pakistan experienced a surge of 42.60% during the past week, undermining the hopes that were sparked by a decline in the first three months of 2023-24. The combination of rising costs of living and stagnant wages has made life difficult for the majority of people, highlighting the challenge of shrinking purchasing power.
While the elite and upper middle class continue to enjoy crowded eateries in big cities, the situation is starkly different for others who have been burdened by sustained food inflation, high power and gas tariffs, and uncontrollable transportation costs.
The week ending on December 21 marked the sixth consecutive week of inflation recording over 41%, as indicated by the Sensitive Price Index (SPI). The SPI is calculated based on 51 essential items.
Gas price hikes, along with a rise in food prices, especially flour, rice, pulses, spices, and vegetables, have made it impossible for people to escape the cost-of-living crisis while their purchasing power diminishes.
In November, Pakistan witnessed a monthly inflation increase of 29.2% compared to the same month in 2022, defying predictions made by the country’s central bank and international financial institutions. The Consumer Price Index (CPI) played a role in this increase.
The Pakistan Bureau of Statistics (PBS) reported significant increases in gas prices, with a 1,108.59% annual increase, followed by cigarettes (93.22%), chili powder (81.74%), wheat flour (78.80%), garlic (72.48%), broken rice basmati (62.52%), rice irri-6/9 (59.45%), tomatoes (56.89%), and sugar (50.33%).
However, during the week in question, the SPI indicated a meager 0.51% decrease.
This alarming trend makes rate cuts an unlikely possibility, as the State Bank of Pakistan (SBP) is implementing a policy of monetary tightening, which is also supported by institutions like the International Monetary Fund (IMF) and top central banks such as the US Federal Reserve and the European Central Bank.
The high interest rates have paralyzed the economy, where the increased borrowing costs are skyrocketing business expenses, which are already higher in Pakistan compared to global standards.
In this environment, it is uncertain whether the confidence among businessmen and industrialists will remain intact, as they were anticipating interest rate cuts.
It’s important to note that without the expansion of existing businesses and the establishment of new ones, there will be a lack of job creation opportunities and wage hikes, further exacerbating the current cost-of-living crisis.
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