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Seems that there is no sigh of relief for the people of Pakistan as the country is once again reporting record-breaking inflation rates of 4.3 per cent on a week-by-week basis.
According to the World Bank, the situation is bound to get worse as its report said that the Consumer Price Index (CPI) is expected to rise 23 per cent in the current fiscal year. With the way things are going, this may not be that far off of a possibility. The government needs to take some proactive measures to prevent hyperinflation from destroying the economy.
The poor and middle classes are bearing the brunt of an unstable and deteriorating economy. As of last week, prices of basic commodities like onion, tomatoes, pulses, cooking oil, mustard oil and similar items have shot up by as much as 50 percent.
The additional impact of the floods has caused a disruption in the market that we may not be able to overcome through imports alone. And what is worse is that there are little to no solutions available to us because the flood-impacted areas are yet to be rehabilitated enough to resume production.
The Asian Development Bank (ADB) has recently released $1.5 billion to Pakistan. The amount was released under the BRACE programme for the credit of the government of Pakistan’s account with the State Bank of Pakistan.
The BRACE (Building Resilience Under Active Countercyclical Expenditures) programme aims to support the government’s efforts to deal with the adverse impacts of devastating floods, supply chain disruptions, rising energy, fuel prices and inflation on the poor and vulnerable.
The reason for this record-breaking spike in rates of inflation is the increase in energy prices. Additional tariffs and global trends have allowed for the price of fuel and energy sources to reach a point where the trick-down effect on industries has been devastating.
The government must explore alternate and cheap sources of energy, like that being offered by Iran, and encourage productivity in the national economy at the same time. Only through being proactive about this will we be able to overcome it.
