Rising Cost of Living in Pakistan: Who Is Paying the Price?
Advocate Sidra Sadozai
One of Pakistan’s worst inflation crises in decades is currently plaguing the country. Millions of Pakistanis are feeling the pinch as Conditions linked to an IMF bailout cause utility prices to rise sharply, food inflation to often surpass 40%, and Consumer Price Index (CPI) inflation to soar to almost 30% in 2023.
All-Around Inflation: From Services to Staples
Budgets are in chaos as a result of the 30–40% increase in food items like flour, rice, pulses, cooking oil, and spices.
Due to the removal of subsidies under IMF guidelines, utility costs—such as fuel and electricity—have gone up by more than 25%.
Due to inflation, which has increased by more than 12–13% in cities and only about 10% in villages, urban consumers are under more pressure than rural households.
Who’s Taking the brunt?
1. Households with low incomes
Families with daily incomes of only ₹300–400 find it difficult to pay for food, electricity, and rent. Some people skip meals entirely or rely on charity.
In order to save money on bills that have doubled recently, parents are pulling their kids out of private schools, postponing medical care, and even limiting electricity.
. The Squeeze of the Middle Class
Salary increases of no more than 10 to 15 percent have rendered once-comfortable households worthless in the face of growing expenses. Their disposable income has drastically decreased.
Many have borrowed money to cover necessities; aspirations of leisure and savings have disappeared.
3. Consumers Relying on Utility
In order to become energy independent and reduce their bills, solar adopters—usually landowners or the wealthy—are moving off the grid. However, this increases the strain on lower-income households that continue to rely on the grid.
Power companies pass on growing fixed costs to non-solar users due to their declining revenue bases.
Sectoral and Economic Repercussions
Employment and Small Businesses
Many small businesses have had to reduce their operations or close their doors as a result of rising input costs and declining demand. The unemployment rate has slightly increased from 6.3% to 9.1%.
In order to manage household needs, young people are leaving school to enter the workforce earlier.
Rent for housing and real estate has increased by 13–30% in the last few months. Due to rising labor, steel, and cement prices, many people can no longer afford to buy a home.
Psychological and Social Repercussions
More than 40% of low-income households currently experience food insecurity, which forces many to forgo meals or substitute nutrient-dense foods.
Anxiety, depression, and burnout are among the mental health crises that are on the rise due to economic uncertainty.
Rationing lines in urban markets, protests over wheat in Gilgit-Baltistan, and mounting grievances over milk taxes and the inflation of basic commodities are all signs of simmering social unrest.
The Government’s Reaction: Steps and Deficiencies
Safety nets and targeted subsidies
The main source of financial aid for low-income families is still the
Although their reach is uneven, small utility store networks also make an effort to provide subsidized necessities.
Fiscal Tightening and Monetary Policy
To control inflation, the State Bank of Pakistan has maintained interest rates close to 11%.
Austerity and subsidy cuts mandated by the IMF contribute to macroeconomic stabilization, but they make poverty worse.
What Must Be Done?
To help low-income families, temporary price caps and subsidies should be implemented for necessities like food, fuel, and medications.
wage indexation and income support increases, particularly for low-paid and public sector employees.
promoting domestic manufacturing to lessen dependency on imports and eventually lower food inflation.
structural deficits that are addressed by fiscal and monetary reforms that do not disproportionately burden the poor.
Clear regulations encouraging fair solar adoption and making sure the poorest people don’t bear the brunt of shared grid costs.
In conclusion
The rising cost of living in Pakistan is a humanitarian crisis as well as an economic one. Inflation is eroding the livelihoods of millions of people, including small business owners, middle-class salaried families, low-income households, and renters. While some people, primarily wealthy solar adopters, are able to insulate themselves, the majority face increasing challenges.
Who actually bears the cost is still the crucial question. Those with fixed incomes, few safety nets, and dwindling opportunities are currently the most at risk.
Equity and urgency are necessary for curative measures. Unchecked inflation poses a threat not only to economic stagnation but also to social instability and generalized hopelessness if prompt action is not taken.
