INFLATION

What is inflation?

The sudden change in prices over a given period of time. Effect over the living of basics in the country and increase in prices and downfall of the economy.

What is the current inflation rate of Pakistan?

Inflation of Pakistan is increased by 27.3% in August 2022 as compared to 24.9% in the previous month.  

What is the factor of inflation?

Following are the Factor affecting inflation:

  • Rate of economic growth:
An economic growth rate is the percentage change in the value of all of the goods and services produced in a nation during a specific period of time, as compared to an earlier period. 
  • Wage growth:
Wage increases cause inflation because the cost of producing goods and services goes up as companies pay their employees more. To makeup for the increase in cost, companies must charge more for their goods and services to maintain the same level of profitability.
  • Oil prices:
Higher inflation tends to lend to higher oil prices. If the federal reserve raises interest rates and slows economic growth to control inflation, oil prices could decline as a result.

  • Inflation expectation:
Inflation expectations are simply the rate at which people, consumers, businesses, investors expect prices to rise in the future. They matter because actual inflation depends, in part, on what we expect it to be.

  • Exchange rate:
The increase in the foreign exchange rate lends to the cheapest domestic goods for foreign consumers, resulting in the increase of exports and total demands and prices. The increase in the foreign exchange price raises the inflation rates.

Why do we have Inflation in Pakistan?

The depreciation of currency of Pakistan is a significant factor in the rising food inflation in Pakistan. The political instability in the country also impacted the currency devaluation. Furthermore, from political instability to an economic and climate crisis, Pakistan has witnessed an innumerable amount of chaos and devastation in 2022.

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