SUMMARY of the Article “High Cost of Living,” by Editorial, Dawn, October 4th, 2024

The article discusses the recent slowdown in the rising cost of goods and services in Pakistan, marking a significant reduction in inflation rates. Headline inflation, which fell to a 44-month low of 6.9% in the previous month, is the result of multiple factors including last year’s high base of 31.4%, falling global oil and commodity prices, stabilization of the exchange rate, reduced demand due to decreasing real wages, and strict monetary tightening. Pakistan’s inflation outlook is looking better, with both core inflation and the three-month average inflation rates dipping into single digits, suggesting a slowdown in imported inflation, especially for items such as energy and food. The State Bank of Pakistan (SBP) has responded to these developments by cutting borrowing costs to 17.5% since June, and private businesses are now advocating for an even more aggressive reduction in interest rates in upcoming months. The editorial also mentions the government’s recent initiative to repurchase costly debt maturing in December at a lower interest rate, reflecting expectations of monetary easing. However, the article notes that the overall cost of living continues to rise despite a lower inflation rate, as consumer expenses for goods and services remain high. This is particularly painful for the middle class, who are still struggling with rising grocery prices, school fees, and medical costs. The editorial cautions against the government’s potential temptation to introduce inflationary measures to stimulate growth in an effort to appease the electorate before » Read More…