Inflation and the poor

The Pakistan Bureau of Statistics (PBS) has reported that the rate of inflation, as measured by the Consumer Price Index, has touched to 9.41 percent. This rise in the general price level will cut the purchasing power of the rupee by the same or more percentage, making transactions more costly to conduct, particularly for the poor. With this alarming situation, the gap between the poor and the rich, in all aspects, is widening. Also, the basic survival of the poor seems to be crippling as their demand for basic life-sustaining goods including food, shelter, and health is more sensitive to the increasing prices.

In addition, persistence in the currency devaluation, increasing petroleum prices, excessive government borrowing from the State Bank of Pakistan (SBP) are expected to add a further hike in inflation. The skyrocketing prices will cause more adversity for the poor who already have less earning potential and income. Resultantly, this will increase the number of the absolute poor (those living below the national poverty line) in Pakistan, hence the dependency burden for the state. The pre-power slogans of the current government were pro-poor but post-power policies are appearing to be anti-poor. Hence, the trade-off between poverty and inflation should be balanced by providing poor people inflation-adjusted incomes or by subsiding food, health, and transportation for them. Otherwise, the constantly increasing costs of living will let the poor stuck in the absolute poverty trap for the next many decades.

Abdul Basit Bhatti

Sukkur