KARACHI: Pakistan’s improving macroeconomic indicators are increasingly being overshadowed by mounting pressure on household incomes, as high petroleum taxation, persistent cost-of-living pressures and alarming hunger indicators raise questions over the social cost of the country’s economic stabilisation programme.
While the government and international lenders have pointed to improvements in foreign exchange reserves, fiscal management and external account stability, ordinary citizens continue to face sharply elevated costs of fuel, electricity, food, transport, education and healthcare.
Petroleum taxation has emerged as one of the most visible sources of pressure, with taxes and levies forming a substantial portion of the retail price of petrol and diesel.
Recent figures indicated that the tax and levy burden amounted to around Rs114 per litre on petrol and about Rs100 per litre on high-speed diesel.
Economists warn that fuel price increases have a broad inflationary impact because transportation costs feed directly into the prices of food, agricultural products, manufactured goods and public transport.
The impact is especially severe on low- and middle-income households, which spend a larger proportion of their earnings on basic necessities.
Pakistan, meanwhile, remains engaged with the International Monetary Fund under its Extended Fund Facility, with fiscal discipline, revenue mobilisation and energy-sector reforms remaining central to the country’s economic adjustment agenda.
In October, IMF staff and Pakistani authorities reached a staff-level agreement on the fourth review of the Extended Fund Facility and the third review of the Resilience and Sustainability Facility.
Subject to approval by the Fund’s Executive Board, Pakistan is expected to gain access to further financial support.
Officials have highlighted growing foreign exchange reserves and improving external stability as evidence that the stabilisation strategy is working.
However, social indicators present a significantly more troubling picture.
The 2026 Global Hunger Index placed Pakistan in the “serious” hunger category with a score of 25.5, ranking the country 106th among 122 countries with sufficient data.
According to the index, around 16.1 percent of Pakistan’s population is undernourished.
It also estimates that 33.6 percent of children under the age of five are affected by stunting, while 9.8 percent suffer from wasting.
The figures have intensified concerns that macroeconomic stabilisation has yet to translate into meaningful improvement in household welfare.
Inflation has eased from previous peaks, but economists stress that lower inflation does not mean lower prices.
Instead, it means prices are continuing to rise, though at a slower pace.
For households that have already experienced several years of sharp increases in food, electricity, gas, transport, medicines and education expenses, the cumulative loss of purchasing power remains severe.
The salaried middle class has emerged as one of the most heavily affected groups because its income is documented and easily taxed while wage increases have frequently failed to match the rise in living costs.
Low-income households face even greater difficulties as food, rent, electricity and transportation consume most of their earnings.
Economic experts argue that Pakistan now needs to shift from a narrow focus on stabilisation towards a more balanced strategy combining fiscal discipline with social protection.
They say the government must broaden the tax base rather than repeatedly relying on petroleum consumers and salaried taxpayers to meet revenue targets.
Greater taxation of undertaxed sectors, including large retail activity, property, wealth and segments of the informal economy, could reduce dependence on indirect taxation.
There are also growing calls for stronger targeted support through programmes such as the Benazir Income Support Programme, expanded nutrition programmes for mothers and children and meaningful protection for low-consumption electricity users.
The central challenge for policymakers is now to preserve Pakistan’s hard-earned macroeconomic stability without allowing the adjustment process to deepen poverty and inequality.
For millions of households, the success of the economic programme will ultimately be judged not by reserve figures or fiscal targets, but by whether their incomes are sufficient to pay for food, transport, electricity, education and medicines.
As economic stabilisation continues, the danger is that Pakistan may improve its balance sheets while weakening the financial resilience of the very households the economy is meant to serve.
