Thesis on inflation in pakistan

On governmental level, an attempt to influence the growth of wage leads to limit the rise in the pay in public sectors, as well as initiates cash restrictions for making payments to the employees of public sectors.

Effects of inflation

Government has never invited foreign investment for the production of basic goods. The purview of inflation has narrowed in the present day since only the phenomenon of increase in the price level is termed as inflation these days. With second largest weight in the CPI Inflation remains the biggest of all these problems. One exception perhaps is the furniture industry, which appears to be less price elastic and more income elastic. As devaluation fuel inflation, it becomes necessary to devalue further to keep our market competitiveness intact. For example, uncertainty about future inflation may discourage investment and saving. For the first ten months of the fiscal year July—April , all important barometers of price pressure in the economy indicated a steady deceleration in inflation. When OPEC reduces oil supply, prices are artificially driven up and result in higher prices at the pump.

Notwithstanding a steady deceleration in inflation, the prices of some of the essential food items out of the basket of items in CPI registered sharp increases, particularly during the second half of the fiscal year and therefore adversely affected the low and fixed income groups. In some ways, we may now be worse off than we were back in As I write this article, this equilibrium has still not come into the real estate market.

literature review on inflation

As far as the private sector is concerned, the government attempts to convince the commercial firms and its employees to implement self-controls at the time of negotiating wages.

This is less common than demand-pull, but can occur independently as well as in conjunction with it. Inflation is a continuous rise in the price of goods and services.

The expenditure on food items constitutes bulk of the monthly expenditure of the poor segment of the society.

Inflation and economic growth theory

It is important to note that a rise in the price of just one or two items does not constitute inflation; nor does a one-time rise in all prices mark an inflationary period. Effects OF Inflation The effects of inflation can be brutal for the elderly who are looking to retire on a fixed income. If income increases at a slower rate as inflation, the standard of living declines even if one makes more. When the general price level rises, each unit of currency buys fewer goods and services. Inflation can also be caused by international lending and national debts. To avoid inflation, investors would switch from holding their assets as money or a similar, susceptible to inflation, form to investing in real capital projects. In the wake of a high lending rate the revival of the economy is looking difficult.

Again, the inflation rate decreases with the increase in the production of goods and with the decrease in the supply of money in the market. Economists believe that in order for the economy to expand and grow, there has to be some level of inflation.

Similarly, the numbers for the months of May, April and March, over their previous months, were 0.

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Inflation in Pakistan Economics Report