Inflation in pakistan

Pakistan has undergone a significant change in economic growth during the last few years, but the core problem of the economy is still unsolved. Inflation still continues to be the biggest of among all these.

The last 5 years of the Pakistan's economy are regarded as highly inflationary period, due to expansionary monetary policy and high oil prices. Inflation is one of the major obstacles in the way of development of an economy.

The Asian Development Bank (ADB) has warned Pakistan that the current high rate of inflation threatens to erode gains made in poverty reduction in the recent past by pushing more people below the poverty line.

In Pakistan, the inflation problems have never undergone such planning process. Government has never invited foreign investment for the production of basic goods.

Inflation adversely affects the overall economic growth, the financial sector development and exploit the vulnerable poor segments of the population. Inflation also decreases the real income and induces uncertainty.

Considering such undesirable impacts of inflation on the economy, there's a consensus among the world leading central banks that the price stability is going to be the prime objective of monetary policy and the central banks are committed to lower the inflation in the economy. Hence the State bank of Pakistan should adopt inflation as their main focus of monetary policy, by targeting inflation explicitly or implicitly as and when required.