No Result
View All Result
Friday, July 11, 2025
MM News
اردو
  • Home
  • Latest News
  • National
  • Dramas
  • Showbiz
    Dhadak 2

    Dhadak 2 trailer: Triptii Dimri and Siddhant shine in emotional love story

    Rabia Butt

    Rabia Butt’s silence alarms fans after Humaira Asghar’s tragic death

    Top 10

    What are top 10 must-watch Netflix films of July 2025?

    Kapil Sharma

    Canada: Kapil Sharma’s Surrey café hit by gunfire days after launch

    Humaira Asghar

    Body of Humaira Asghar handed over to family, sent to Lahore for burial

    Filmmaker

    Filmmaker sentenced to two years for publishing defamatory letter on Facebook page

  • Thought Box
  • Business
  • Opinions
  • Technology
  • The Other Side
MM News
  • Home
  • Latest News
  • National
  • Dramas
  • Showbiz
    Dhadak 2

    Dhadak 2 trailer: Triptii Dimri and Siddhant shine in emotional love story

    Rabia Butt

    Rabia Butt’s silence alarms fans after Humaira Asghar’s tragic death

    Top 10

    What are top 10 must-watch Netflix films of July 2025?

    Kapil Sharma

    Canada: Kapil Sharma’s Surrey café hit by gunfire days after launch

    Humaira Asghar

    Body of Humaira Asghar handed over to family, sent to Lahore for burial

    Filmmaker

    Filmmaker sentenced to two years for publishing defamatory letter on Facebook page

  • Thought Box
  • Business
  • Opinions
  • Technology
  • The Other Side
No Result
View All Result
No Result
View All Result
MM News
اردو
  • Latest
  • Showbiz
  • Thought Box
  • Business & Stock
  • Opinions
  • Technology
  • The Other Side-Pakistan
Home Opinion & Editorial Opinion

Inflation is really linked with dollar

Dr. Muhammad Shahbaz by Dr. Muhammad Shahbaz
August 29, 2022

Inflation is a measure of rising prices of goods and services in an economy. Inflation can occur as prices rise due to increases in production costs, such as raw materials and wages. A surge in demand for products and services can cause inflation as consumers are willing to pay more for the product. Some companies reap the rewards of inflation if they can charge more for their products as a result of high demand for their goods. Inflation can occur in nearly any product or service, including need-based expenses such as housing, food, medical care, and utilities, as well as want expenses, such as cosmetics, automobiles, and jewelry. Once inflation becomes prevalent throughout an economy, the expectation of further inflation becomes an overriding concern in the consciousness of consumers and businesses alike. Inflation can be a concern because it makes money saved today less valuable tomorrow.

Importantly, inflation is a tax that erodes the purchasing power of the currency. Thus, the poor, who hold much of their assets in cash, bear this tax disproportionately, while the rich can partly evade it by holding assets that are return-bearing (like bonds), increasing in value (like land), or in a stable foreign currency (like the dollar). Inflation erodes a consumer’s purchasing power and can even interfere with the ability to retire. For example, if an investor earned 5% from investments in stocks and bonds, but inflation rate was 3%, the investor only earned 2% in real terms. It may be one of the most familiar words in economics. Inflation has plunged countries into long periods of instability. Central bankers often aspire to be known as “inflation hawks.”

Politicians have won elections with promises to combat inflation, only to lose power after failing to do so. Inflation was even declared public enemy no. 1 in the United States by President Gerald Ford in 1974.

The US dollar hit an all-time high against an already debilitated Pakistani rupee. The greenback that began its streak against the Pakistani rupee last month following an ongoing political crisis, which also saw the ouster of former premier Imran Khan’s government through a successful no trust motion traded at Rs 200.5 in the open market. Apart from the ongoing political instability, economists cite the country’s depleting foreign reserves, rising imports, and the government’s “reluctance” to take decisions on some International Monetary Fund (IMF) conditions, as key factors behind greenback’s upward march.

The IMF that announced a $6 billion bailout package to prop up the South Asian nation’s sputtering economy in 2019, demands withdrawal of subsidies on several items, mainly petroleum and electricity. This has forced the newly-elected Prime Minister Shehbaz Sharif to retain petroleum prices in order to avoid a public backlash, despite rising prices on the international markets. Annual inflation rate in Pakistan increased to 24.9% in July of 2022, the highest since October of 2008, from 21.3% in June, amid a slide in the rupee to fresh record lows.

Transport prices recorded the biggest increase (64.7%), namely motor fuels (94.4%); followed by food and non-alcoholic beverages (28.8%), mainly vegetables (40.5%), pulses (92.4%), cooking oil (72.6%), wheat (45%) and milk (24.8%); restaurants and hotels (25%), alcoholic beverages and tobacco (22.5%), and housing and utilities (21.8%), namely electricity charges (86.7%). Compared to the previous month, consumer prices were up 4.4%. In Pakistan, most important categories in the consumer price index are food and non-alcoholic beverages (35% of total weight); housing, water, electricity, gas and fuels (29%); clothing and footwear (8%) and transport (7%). The index also includes furnishings and household equipment (4%), education (4%), communication (3%) and health (2%).

The remaining 8% is composed by: recreation and culture, restaurants and hotels, alcoholic beverages and tobacco and other goods and services. The federal government set the inflation target at 11.5% for this fiscal year but the SBP distanced itself from the official target, saying that the inflation may remain in the range of 18% to 20% during the current fiscal year. The prices of all essential products seemed to slip out of the control of authorities, particularly crucial kitchen items like edible oil. The prices of onions jumped 100% last month compared to a year ago, followed by a 90% increase in the rates of pulses in the rural areas and 83% for various types of ghee and cooking oil.

Multiple reasons can account for the surprise appreciation in the Pakistani rupee against US Dollar. Few reasons discussed in different forums and webinars are; postponing of loans, getting relief aid, exports having achieved higher growth than imports, increase in remittances, current account surplus, saving in forex spending on foreign tours, foreign education, Umrah and Hajj, dollars inflow in open market and possibility of increase in for-ex reserves. But inflation is still high due to some reasons which are as; the first is money growth. For a fixed supply of goods, more money in circulation means higher prices. Monetary loosening can happen due to structural factors like fiscal dominance, where the central bank is forced to print money to finance fiscal deficits; and/ or cyclical surges in capital inflows, and the accompanying credit/ real estate booms. The second is factors that affect import prices.

As a heavily oil-reliant importer, and with no real foreign exchange or fiscal buffers to limit pass-through to domestic prices, a part of Pakistani inflation is simply determined by global oil price movements. The third is domestic supply shocks. Floods, droughts, crop pests can all raise the price of domestic goods, and often goods that are essential to the poor.

While governments cannot wish these shocks away, it can and must invest in resilience mechanisms, as these are likely to benefit the poor most. In sum, inflation is a multi-source problem. It has been high, but manageable, in Pakistan. Inflation affects the poor disproportionately, the government must continue to take structural measures to keep it low, and to compensate the poor via lifeline tariffs and cash transfers for any temporary surges. It seems that inflation is a governance issue not really linked with Dollar.

ShareTweetSendShare
Previous Post

75 years of independence

Next Post

Inside Sabzwari family’s feast for friends

Related Stories

Opinion

Portugal and Pakistan: Building a Bilateral Bridge in a Fractured World

June 29, 2025
Opinion

A Peace Prize for Betrayals: Rethinking Pakistan’s Strategic Alliances

June 28, 2025
Opinion

“Run Lola Run” – More than a movie to cultural bridging

June 27, 2025
Opinion

Ceasefire or a Smokescreen? The US-Iran Next Dialogue of Disillusions

June 26, 2025
Opinion

Israel-Iran War and Supply Chain of World Economy

June 25, 2025
Opinion

Unleashed Modern-day Holocaust and the Global Collapse

June 23, 2025
Opinion

Firestorm in the Middle East: Global Stakes on Exploding Frontlines

June 19, 2025
Opinion

A Celebration of Shared Struggle and Future Aspirations

June 17, 2025
Opinion

A Strategic Leap, Not Just A Flight

June 16, 2025
Opinion

Russia Day 2025

June 15, 2025
Next Post

Inside Sabzwari family's feast for friends

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Trending Stories

File photo
Technology

OpenAI to release web browser to challenge Google Chrome

by MM News Staff
July 11, 2025
Babar Azam failed to perform in CT 2025: File photo
Sports

Babar Azam will open if selected: Head Coach Mike Hesson

by MM News Staff
July 11, 2025
File photo
Uncategorized

Pakistani airline takes Karachi-bound passenger ‘mistakenly’ to Saudi Arabia

by MM News Staff
July 11, 2025
File photo
Health

Pakistan’s immunization program falls short of 100% coverage

by MM News Staff
July 11, 2025
Photo credit: Pakistan Navy
Uncategorized

Military awards conferred upon Pakistan Navy personnel

by MM News Staff
July 11, 2025

Opinion

Munir-Ahmed
Portugal and Pakistan: Building a Bilateral Bridge in a Fractured World
June 29, 2025
- Munir Ahmed
munir ahmed oped
A Peace Prize for Betrayals: Rethinking Pakistan’s Strategic Alliances
June 28, 2025
- Munir Ahmed
munir ahmed oped
“Run Lola Run” – More than a movie to cultural bridging
June 27, 2025
- Munir Ahmed
No posts found
See all

Weather Updates

file photo
Weather

Flood warning issued as heavy rain expected in parts of Pakistan from July 13-17

by APP
July 11, 2025

The National Emergencies Operation Center (NEOC), under the National Disaster Management Authority (NDMA), has...

File photo

Monsoon rain-related incidents claim 87 lives across Pakistan: NDMA

July 10, 2025
Rain in Lahore

Heavy rains flood Lahore, city paralyzed as roads resemble ponds

July 10, 2025
Flood

NEOC issues flood alert as monsoon claims 19 lives across Pakistan

July 8, 2025
See all

Prices

representative image
Business & Stock

Latest gold prices in Pakistan today- July 11, 2025

by MM News Staff
July 11, 2025

The following are the latest gold rates in Pakistan on Friday, 11 July 2025....

File photo

Electricity prices slashed across Pakistan

July 9, 2025
File Photo

Here’s how much extra you will pay under the revised gas tariff

July 9, 2025
(Pak Suzuki)

Pak Suzuki increases motorcycles prices in Pakistan: Check new rates

July 9, 2025
See all

Transport News

Pakistan Railways
Top News

Pakistan Railways to launch high-tech business train on July 19

by MM News Staff
July 11, 2025

Pakistan Railways has announced the launch of a state-of-the-art, fully digitalized new business train....

(APP)

Sindh to roll out 1,000 electric buses across various routes in Karachi

July 5, 2025
Sukkur Express

Passengers on Sukkur Express roof hit by power lines: 1 dead, 11 injured

July 5, 2025
(Karachi Police)

Muharram processions: THESE Karachi roads will be closed for traffic from Friday to Sunday

July 4, 2025
See all

MM Digital (Pvt.) Ltd.

MM News is a subsidiary of the MM Group of Companies. It was established in 2019 with the aim of providing people of Pakistan access to unbiased information. Contact Details: 03200201537

Quick Links

  • Home
  • Advertise
  • MM News Urdu
  • The Other Side-Pakistan
  • Contact Us
  • Privacy Policy

Top Pages

  • Latest News
  • Showbiz
  • OP-ED
  • Technology
No Result
View All Result
  • Latest News
  • Showbiz
  • Thought Box
  • Business
  • Opinions
  • Technology

© Copyright 2024 MMNews - All Rights Reserved.