Inflation is one of thealarming issues faced by the whole world. It generally refers to a continuous increase in prices of goods and services in a state. Once a state is trapped by inflation then it is not easy to get rid of it. Pakistan is also facing this crucial issue, the purchasing power of people has become very low, and they do not even fulfil their necessities. In extreme cases, people have attempted suicide and many people reduce their food consumption.
The current inflation rate is 27.3 per cent, and there is a 4.3 per cent increase in the inflation rate every month. There are several main causes which have led to hyperinflation in Pakistan, including natural as well as human-made i.e. pandemics, floods, population, corruption, national debts, high rate of imports, unemployment, improper budget distribution and reduction of taxes.
After the partition, Pakistan was known as one of the best economic countries and was a well agricultural and industrial country. Pakistan was an example for other developing countries. In the 1960s Pakistan gave loans to other countries. At that time there was no problem with inflation.
In 1973, due to poor management of the PPP government, oil prices increase sharply and Pakistan’s inflation rate reached11.7 per cent. After that Gen Ziaul Haq imposed martial law and developed the economy of Pakistan which decreased the inflation rate up to 7.5 per cent in the 1980s.
In 1988, the general elections were held and both Benazir Bhutto and Nawaz Sharif played musical chairs none of them completes their tenure which causes a high rate of corruption. During this period Pakistan became a member of the Structural Adjustment Program (SAP) of the International Monetary Fund (IMF). Due to the SAP of IMF economic growth rate of Pakistan fell from 3 to 4 per cent, the poverty level increased up to 35 per cent, foreign debts increased and the inflation rate reached double digits.
In 1999, Pervez Musharraf took control and imposed martial law. This period from 1999 to 2007 was a magical economical growth period for Pakistan. During this period the GDP increased from 2.1% to 7%. The inflation the rate fell from double-digit to 5.5 per cent. In this period foreign investors were interested to invest in Pakistan. After that from 2008 to 2013 once again PPP came into government and this was challenging for PPP to keep the same conditions of economy and rate of inflation. But unfortunately, the PPP government failed to keep momentum which resulted in a high inflation rate (20.3%) in history. This period was considered one of the worst periods in history in terms of bad governance, tax reforms and corruption.
After that in 2013, PML-N came into power. During this period, the inflation rate decreased but was not insufficient as per the international market. During this period, the rate of debt loanswas high in history. The rate of unemployment was 3.8 per cent which was at its peak in history. After that in 2018, the PTI took control over and the GDP fell from 5.83% to 0.98% and the inflation rate increased from 3.92% to 7.33%. The cause of hyperinflation in Pakistan was the pandemic COVID-19 which lockdown the whole world and paralyze the whole world and the inflation rate of the whole world was atits peak.
In May 2022, the opposition party (PML-N) moved a no-confidence motion against PTI and once again PML-N came into power. Immediately after PLM-N came into government, the inflation rate has been accelerating more. Last month, the Pakistan Bureau of Statistics reported that there is a 90 per cent increase in the prices of food accessories and a 150 per cent increase in petroleum as compared to the last year’s rates. However, the barrel of petrolin the international market is now cheaper in comparison with last year. Moreover, due to government planning failure in heavy rains and floods the country has faced heavy inflation, people do not even fulfil their food necessities, and they have cut their children from school and put into labouring.
From the above, we have concluded that inflation is a big issue which damages the GDP and stops the economical growth in a country. After independence, Pakistan was one of the well economic developed countries, but from the 1970s Pakistan’s economical growth has been decreasing and the inflation rate has been increasing due to corruption, tax reforms, national debts, and unemployment.
To reduce inflation, the government should impose taxes, this would help in reducing the demand and prices of goods and services will decrease. The government should not take many loans from the international community i.e. IMF, this will also be one of the best ways to decrease the inflation rate.
The government should increase the rate of exports rather than imports which will also help to grow the economicrate. The government should also increase the rate of employment. The corruption is an alarming cause in increasing the inflation rate, for that government should make secret agencies to diminish the corruption in subordinate officers.