Ever increasing inflation rate has been a constant menace to the economy of Pakistan. The average annual inflation rate for July-Jan 2015/16 over July-Jan 2014/15 was 2.26 percent. Core inflation rate increased 4.6 percent in May of 2016 over the same month in the previous year. 

As a result of soaring inflation, common people have been the direct target as they have not been able to participate in national development of their nation. It is not only the rising growth figures that benefit a country but the trickling down effect of national growth and development on country population may matter even more toward the creation of equality for all citizens and the eradication of poverty. Pakistan’s inflation rate presents an unequal picture where it gives birth to class disparity, poverty, poor human development and so on. In a way, it devours overall growth and development of the nation. 

Certain elements contribute to the rise of inflation in Pakistan: Increase in population effects certain other factors, the demand for goods and services measures supply remaining the same, expenditure will increase and inflation occur. 

Due to some unfavorable climatic situations, political, social, national or international situation production remains low (small) in any particular year and supply will also decrease, prices will go up and inflation will occur. In certain cases cost of production increases due to rise in the prices of factors of production, producer rises price level and due to excessive expenditure inflation occur. 

Inflation also takes place due to the increasing rate of growth of population. As Pakistan is an over populated country and the rate of growth of her population is about 3% per year, while the rate of production of goods is very low and due to this prices of commodities rise and inflation occur. 

In Pakistan major amount of money is spent on the development programmes and due to increase in the income of the individuals, their expenditure is the basic cause of the inflation. 

Pakistan is fundamentally an agricultural country. Near about 30% of national income is had by agriculture sector. But unfortunately there is an acute shortage of food grain in Pakistan and so is the case with other developing and under developed countries of the world. The prices of other commodities are influenced by the continuous rise food grain prices and thus inflation occurs. 


Faisalabad, June 29.