Unpacking inflation and wage crisis in Pakistan

Over the last five years, food inflation, as measured by the Pakistan Bureau of Statistics, has accumulated to more than 114 per cent, compounding by 22pc on an annual basis and exceeding overall inflation levels. Food inflation’s impact and affordability play a critical role in determining wages, as expenditure on food makes up more than 47.1 per cent of the poorest quintile and 44.5pc of the subsequent quintile — as per the Household Integrated Economic Survey 2018-19. As food expenditures take up almost half of any household’s income, the space for expenditure on other essentials is constrained, resulting in households making compromises on health and education. Taming food inflation and ensuring price stability remains critical in tampering with inflation expectations while opening up space for households to increase expenditure in other areas.