Pakistan, currently, is amid multifarious catastrophes leading to the backwardness of the state day by day. Inflation, undoubtedly, is a hugely disputed and controversial issue in the current scenario, caused by multifarious domestic and international pitfalls. Consequently, the persistent hike in the prices of commodities has led the masses towards financial, social, and psychological distress which is an alarming sign for the local, provincial, and central governments. On the other hand, the adverse impacts of inflation create discontent among the working class in agriculture, services, and industrial sectors. In the same way, where there is unbridled inflation, unlawful practices including theft, disharmony, and worst law and order, situation incur. Social instability, no doubt, becomes the fate of the state. Nevertheless, affirmative action must be taken effectively by the state to address this issue at a faster pace. According to the sources, the projected inflation rate is expected to be 31% due to a hike in electricity and fuel prices. Nevertheless, this burden has given rise to various questions regarding the government’s performance and monetary regulatory institutions.
However, there are various social, economic, political, and environmental factors involved in the uncontrollable Pakistan’s Inflation. First and foremost, the trade deficit and Exchange Rate fluctuations play a responsible role in uplifting inflation. Historically, Pakistan has been coping with higher imports than exports since its inception. Fluctuations in exchange rate devaluates the Pakistani currency. As a result, the devaluation of Pakistani rupee makes imports more costly which leads to the high prices for imported goods and services. Inflation, therefore, increases generally. On the other, changes in the global prices of imported goods also intensify the inflation rate domestically. Secondly, monetary policies have also major role in enhanced inflation. The central bank of Pakistan, commonly known as State Bank of Pakistan, use expansionary monetary policy. It demonstrates that when interest rates are being lowered and the money supply will be increased in economy leading to a higher demand while keeping supply at the same level. Hence, the lower supply and higher demand gives rise to the hike in general prices of goods and services in the market. Additionally, political instability is also one of the basic causes of inflation having fragile policies regarding agriculture and service sectors, inadequate infrastructure and political rivalries enhance inflation rate. Furthermore, incumbent government fails to provide fundamental needs to such a chunk of population owing to limited resources. As a result, inflation becomes high when there is high demand of goods and services due to their unavailability so that consumption can be abated.
Consequently, inflation poses adverse impacts on social, economic and political sectors. On the socio-economic levels, high inflation, undoubtedly, leads to unlawful practices in the country. When general prices of goods and services increase, the middle class as well as low class masses feel financial distress. As a result, they use illegal ways such as theft, murdering, bribery looting, street crimes, terrorism acts and corruption practices, to met their basic needs. In this way, social unrest becomes part of the society. Similarly, law and order situation face several challenges when inflation rises. Apart form it, suicide rates become common in the state especially in the backward areas . As per reports, Pakistan’s economic conditions forcing masses to end their lives as they can not face the formidable challenges of inflation and poverty. It demonstrates the failure of the democratic state. Besides these, wealth gap boosts up to an unprecedented extent. While going up the general prices of goods and services, those who owns assets such as stocks get increased in value. In contrast, masses having the low and fixed income hardly survive in these circumstances. Hence, the gap between the poor and the rich is being widen day by day especially when there is high inflation. In Contrast, the case is different when there is medium rise in general prices. It stabilizes the economy and signals the green light for country. Mediate inflation is a sign of growth of the economy. On politico-administrative levels, these sectors also face formidable confrontation when inflation heats up. Public, owing to financial constraints, feels discontent and dissatisfaction. Resultantly, political chaos commence in the state in the forms of protests and voting boycotts leading to a change in the leadership. Lack of public confidence in the government gives rise to various issues in the state. Additionally, it develops such an environment where corruption becomes prevalent.
All things considered, stringent measures are needed to address the burden of inflation which is coupled with limited benefits but higher loopholes . The careful use of monetary policies by the regulatory authority is the need of an hour. Secondly, sound economic policies can pose positive impact and assists in abating hyperinflation. Pakistan must go towards social, political, economic, and administrative reform to give relief to the public. All the root causes must be addressed efficiently to end the adverse consequences of inflation.
Shaheed Benazir Bhutto University, NAWABSHAH