Rise in inflation caused huge pressure on population: World Bank

The World Bank has claimed that the surge in inflation has caused huge inflationary pressure on Pakistan's population, reducing their purchasing power by more than 20 percent, besides giving a new height to poverty in the recent past. Its report on Pakistan's economy and recent trends terms the up-going trend in inflation a serious concern which needs to be taken care of in economic policy making so that the people of Pakistan are safeguarded against price hikes.
The report forewarns that any sceptical views on rising inflation and its impact on the purchasing power of Pakistani people can make things even worse. The report said: "Inflation, particularly, food-price inflation, hit poor households disproportionately, due to their high share of expenditures to take their average share in 20 percent (in totality) to 55 percent". The report noted that poverty head count rate would be nearly 15 percentage points higher than the counterfactual scenario in Pakistan presently.
It would simply mean that if there had been no inflation in 2007-09 (two consecutive fiscal years), poverty rate in Pakistan would have been subsequently lower than what actual is now. The report gives a clear picture of high inflation in the recent past and counts its disturbing impact on the people of Pakistan. It said that in recent two to three years, the food CPI and non-food CPI rose 23.7 percent and 18.4 percent respectively.
This implies that purchasing power of Pakistan's population declined by 21 percent, on average, and poverty head count rate would be 15 percentage points higher than the counterfactual scenario. It indicated that the most striking feature of poverty dynamic in Pakistan is that overmuch of the last two decades economic growth and poverty reduction were often short-lived and followed by frustrating reversals.
In Pakistan, over the last 13 years, poverty headcount declined modestly, from 25.5 percent to 22.3 percent, with several periods when poverty fell only to increase at a later period. It suggested that six years, between 1996 and 2002, when three years' moving average of per capita GDP growth remained below 2 percent, it was the most difficult time in Pakistan's economic growth which showed considerable increase in poverty incidence.
The report shows high fluctuation in per capita income of Pakistani population in the last one decade. The poverty figures and related studies of the donors, in particular that of the World Bank, have always been contested by the policy-makers in Islamabad. The authorities take strong exception to such reports, and reject donors' claims on poverty situation in Pakistan.