Inflation jumped to over 9.1% in March-the highest rate in as many months, mainly due to an increase in food and electricity prices. High inflation lowers purchasing power and real income of the people, Consequently, more people fall below the poverty line.

Inflation during March 2021

According to the Pakistan Bureau of Statistics (PBS), inflation edged up to 9.1 percent in the march against 8.7 percent in February this year. Mainly inflation upsurge due to high prices of food and electricity. The electricity rates were 31.5 percent higher than the previous year. Almost all food prices recorded a double-digit increase including wheat, sugar, and wheat flour.

The 9.1 percent increase in inflation in March 2021, showed that food and non-alcoholic beverages prices increased by 11.58pc. This double-digit increase in prices makes it difficult for middle and low-income groups to manage the kitchen with limited resources.

The International monetary fund saying, the country’s inflation will increase this year. As per the report, the government has projected the inflation rate to be at 6.5% during the current fiscal year, while the IMF projects it to be at 8.7%.

The COVID-19 pandemic also reversed years of effort into the elimination of poverty. The poverty rate declined from 64% to 24% in 2015 which occurred over a period of 20 years. However, with the arrival of Coronavirus, the poverty rate is predicted to increase to 40% according to the IMF.

Covid-19 led to more inflation, several million more people are suffering from food insecurity due to the pandemic, bringing the total to 43 million. Those most at risk are the people who live below the poverty line and groups such as women, children, senior citizens the disabled, and minorities.

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Inflation-Reason of Poverty

Inflation depicts a rise in the average price of the consumption basket- affects the budget of the individual households of the economy- affecting the livelihood of the poor section of the society. When prices for food and domestic utilities such as water and heating rise at a rapid rate. With millions of people facing a cut in their wages, rising inflation leads to a fall in real incomes. When high inflation joins hands with poverty, the cost of goods and services increases. The poor will have less purchasing power and their standard of living will decrease. Thus inflation stunts their growth and condemns them to perpetual poverty for generations together. Consequently, the poor, the vulnerable whose real incomes have been reduced, are the worst sufferers and there is no real solution in sight.

Inflation is the parent of unemployment and the unseen robber of those who have saved – Margret Thatcher

Underprivileged sections of society are now living under extreme poverty which continues to grow. Government policies have been unable to deal with this issue. The World Bank report estimates two million people have fallen below the international poverty line of $1.9 per day and 40pc of the households are suffering moderate to severe food security.

Inflation Hurts Poor’s

As we know inflation is closely linked with poverty. Both poverty and inflation are on the rise in Pakistan, the high inflation doubles down the impacts of poverty. Inflation hits more poorest families than the richest ones. Many people in our country can’t afford to buy food for them for a day. They have not enough money to fulfill essentials, Life becomes more miserable and painful for them. Low-income families affected more by the cost of necessities such as food, energy, transport, and childcare – are putting a strain on their budget.

In March, the wheat prices were 35% higher, followed by a 24% average increase in prices of sugar, 19% wheat flour, 20% pulses, and 17% vegetable ghee according to PBS. This double-digit rose in food, clearly shows that food inflation is very high in the country, lead to poverty. With lower-income and high prices person will not able to get an education, he is not able to buy enough nutritious food for his family so there is a health decline. When he is unhealthy he is not able to work because for a job he needs energy. So due to high inflation, he remains poor.

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Conclusions:

As more and more of these people fall below the poverty line. Reduction of poverty becomes the most important point on the agenda of the Pakistan government. However, poverty can be reduced if the factors linked with poverty are dealt with judiciously. The rise in prices beyond a certain limit is damaging the poor communities.

The policymakers in Pakistan who want to reduce poverty must not allow the prices to rise beyond a certain limit. To control Inflation, Pakistan must have to lower the cost of production. The agriculture sector should be given subsidies, foreign investment should be attracted, and developed countries should be requested for financial and managerial assistance.  “Production is the only answer to inflation” – Anonymous

The government should protect the poorest families from the most terrible effects of rising Inflation, By introducing special aids, food packages as well as compensation for poor’s. Only then one can hope that poverty will reduce in Pakistan. As a nation, We can also contribute to reducing poverty by giving old clothes, shoes, and bags to poor people.