Inflation still haunts middle class as essentials get dearer

LAHORE: Inflation seems to be under control, but the middle class is under immense pressure as there is a constant increase in the cost of housing, education and healthcare services.

Food inflation may go up or down and with it the rates of edibles and commodity increase or decrease. 

Planners are more receptive to food inflation as increasing rates of vegetables, pulses, meat, sugar and edible oil severely hurt the poor. There may not be any or nominal cost on housing for the slum dwellers. They have no choice but to send their children to the substandard public-run schools. For their health needs, they waste days to get treated at the government clinics or go to quacks. But, the segment of society, living a more privileged life, has to buy these services at the current market rate.

No one has paid serious attention to the galloping costs of healthcare, education and housing that actually hurt the middle class. The shortage of housing is more due to constant migration of the rural population to the urban centers. Due to this, the demand of houses increase one million units every year, creating a backlog of eight to nine million houses in the country. The influx in the urban centres is likely to increase in the coming decades as the growth is concentrated in the cities. Under these circumstances, the house rents are bound to go regularly up. The construction industry and its supply chain are inefficient and atomised in Pakistan.  

Industry experts said construction cost in the country is 30 percent higher than China. Last year, the inflation was below three percent, but house rents have to increase average 7.5 percent a year. In reality, the increase is much higher.

In case of education and healthcare, the government has abdicated its duty to the private sector. There are more private schools than the state-run schools. All charge heavy fees compared with no fee by the government schools. The private schools take high fees because the government schools generally fail to impart quality education. Only the children of poor go to these schools. 

The middle class compromise on food and other amenities to educate their children in the quality schools. The standard increase in school fees ranged between 10 and 15 percent a year during the past two decades. Last year, the relentless increase in fees forced the parents to lodge protests. It forced at least the Punjab government to put a freeze on the fee hike by the private school owners. However, they have again raised the fees much above the average inflation of the previous 12 months.

Analysis of the fee structure of any private school revealed that fees had more than doubled in the past one decade. This is a part from the other charges demanded by schools from time to time. These include provision of filtered water, sport facilities and air conditioning.

Health is an important issue for the middle class. Poor class tends to neglect minor health issues; they visit the state-run hospitals and basic health units. The deaths rate from water borne diseases is higher in poor than the middle class. Middle class families are mostly educated and give importance to the health problems. The poor services, provided by the state-run health institutes, force them to go to the private clinics that are extremely expensive.   

Average medical hospitalisation cost increased three-fold in the past one decade. Some middle class workers get health insurance from their employers; but most of them are not covered. Better lifestyle has made middle class family highly vulnerable to non-communicable diseases, which include diabetes, cardiovascular diseases, chronic respiratory disease and cancer. The treatment cost of all these diseases is very high.

Weight given to these services in consumer price index inflation basket is very low: 3 percent for education, 4 percent for housing and 8 percent for health services.