There is no respite for the common man from escalating prices and taxes but government spending and privileges and parks for the ruling elite continue to rise. Raging inflation is the biggest headache for the people.

Last week, the government announced that the annual inflation for 2023-24 exceeded its budgetary target of 21 per cent, reaching 23.41 per cent owing to an increase in the cost of electricity, gas and essential kitchen items. According to data released by the Pakistan Bureau of Statistics, the headline consumer inflation was 28.3pc in July 2023 which peaked at 31.4pc in September, and then started to decline in January. It reached its lowest level of 11.8pc in May but reversed upward to 12.6pc in June.

Since May 2022, the country has been in the grip of inflation above 20pc as the government has tried desperately to clinch an International Monetary Fund bailout deal. A basket of goods measures the headline inflation called the Consumer Price Index (CPI). The index slightly increased 0.5pc from May. In June, urban inflation was 14.9pc year-on-year and 0.6pc month-on-month, slightly up from 14.3pc and -2.8pc in May. Rural inflation was 9.3pc year-on-year and 0.3pc month-on-month, going up from 8.2pc and -3.9pc in the previous month.

It is relevant to add here that food inflation for June stood at 2.6pc in urban areas and 1.3pc in rural areas, whereas non-food inflation was 24.3pc in urban areas and 17.9pc in rural areas. It is important to recall here that food inflation dropped to a single digit at 9.4pc in October 2021. Since then, it kept increasing, hitting an unprecedented level at 48.1pc in May 2023. Core inflation, which leaves out volatile food and energy prices, was recorded at 12.2pc in urban areas and 17pc in rural areas. In the past 12 months, core inflation in urban areas was 18.4pc in July 2023 before gradually declining to 12.2pc in June 2024.Independent economists say the Pakistan Bureau of Statistics is measuring inflation from a high base of last year. The lower rate did not mean prices did not increase, let alone dropped, in June.

Now the finance ministry has projected medium-term inflation to normalise in FY25 and FY26 due to improvements in the agriculture sector and anticipated favourable global and domestic conditions. The government has set an inflation target of 12 per cent for this fiscal year. But skyrocketing prices from the beginning of the fiscal year from July 1 indicates that meeting this target would be difficult. The price of 250ml packaged milk has gone up from Rs75 to Rs95 and that of a one litre from Rs295 to Rs360. The recent rise in petrol prices and possible hikes in the future due to the imposition of a petroleum levy would make it difficult to curtail rising prices.

The overall situation is bound to worsen as in the FY25 budget the government has withdrawn tax and energy subsidies from all sectors and ruthlessly taxed the entire spectrum of production and consumption, sparing just agricultural income and income from property transactions by civil and military officers. Additionally, the government has introduced new taxes and to ensure that non-filers of income tax returns become filers, 210,00 sims have been blocked. All these measures are aimed at raising tax revenue which will mean more hardship for the hard pressed consumers.

In the opinion of most economic experts, in the coming months, we may see inflation rising, joblessness persisting, and the gulf between the elite and the ordinary citizens widening due to energy price hikes, withdrawal of tax subsidies and imposition of new taxes and the elite groups’ total disregard of the welfare and interests of the common people.

In order to raise maximum energy and tax revenue, electricity consumers are being forced to pay ridiculously high amounts of bills for even a single unit of power they use beyond a certain limit. Due to new taxes imposed on food items including packaged and infant milk a new wave of general inflationary pressure is building up in the coming months.

It is a bleak economic outlook unless the government puts its own house in order. A new austerity drive is the crying need of the day. To lead the way, first of all, the government reduce its own expenses, including the royal perks and privileges of public office holders, lavish travel allowances, colonial style accommodation facilities, luxury vehicles, thousands of free units of electricity and gas for official residences and thousands of litres of free petrol for their official cars and jeeps.

Unless the government initiates immediate reform measures to bridge the widening gulf between a small elite class and the poverty-stricken masses, social unrest which is simmering beneath the surface may lead to a violent explosion, bringing the whole system down and creating such chaotic conditions that will be difficult to control.