Essay on inflation in pakistan

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Inflation imposes high cost on economies and societies, excessively hurts the poor and fixed income groups and creates uncertainty throughout the economy and undermines macroeconomic stability. High inflation has always affected the poor more than the rich because the poor are less able to protect themselves against fluctuating costs and less able to face against the risks that high inflation poses.

Inflation On The Economy : Inflation

Lowering inflation, therefore, directly benefits the low and fixed income groups. High inflation rates are regarded as harmful to economy. They add inefficiencies in the market, and make it difficult for companies to budget or plan long-term. Inflation can act as a pull on productivity as companies are forced to shift resources away from products and services in order to focus on profit and losses from currency inflation.

Uncertainty about the future purchasing power of money discourages investment and saving. Inflation can also impose hidden tax increases. For example, inflated earnings push taxpayers into higher income tax rates unless the tax brackets are indexed to inflation. With high inflation, purchasing power is redistributed from those on fixed nominal incomes.

The government has to do its best to bring down inflation to a low level which the State Bank of Pakistan has indicated in its statement on financial policy. The causes of the consumer price inflation are too many, beginning with the basic and other food items like mutton, beef, chicken, eggs and milk. They include the house rent which has a large share in the consumer price index and rising transport costs.

The State Bank has been very keen in listing almost all the factors which increases the inflation. The Bank has been more honest than before and its statement shows that while many sectors show the rising trends in inflation, real relief is coming forth from almost no sector.

What Is Inflation Definition – Causes of Inflation Rate and How to Fight the Effects

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Inflation and it's Effects

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