The income of the common people has more than halved in a few months as the government has hiked power and gas tariffs, imposed new taxes and withdrawn subsidies on fuel in a bid to unlock an International Monetary Fund bailout. It not only hit the common people but also the industry. Millions of people have already lost jobs and many more will suffer the same fate in the coming weeks and months.

The rupee continues to shed its value against the US dollar, which contributes to the unprecedented price hike. The government has recently approved a Rs170 billion “mini-budget,” which in fact will have a fiscal impact of more than Rs510 billion annually. Under the finance supplementary bill, the general sales tax (GST) has been hiked from 17pc to 18pc besides increasing the federal excise duty on sugary items, tobacco, airline tickets, marriage halls and cement.

The National Electric Power Regulatory Authority (Nepra) has also notified an additional surcharge of Rs3.39 per unit on electricity. The move is aimed at generating Rs75 billion in revenue until June. It will add to the sufferings of the common people, who have already been crushed under high prices. As the rupee continues to weaken against the US dollar, fuel prices are also expected to increase significantly in the next fortnight. It means that March, though considered the month of spring, will herald a long and hard period of agony for the people of Pakistan.

Inflation has broken all records in a government, which had started a movement against the previous PTI government for policies which hiked prices. Prices were gradually increasing in the PTI government and it was becoming unpopular day by day. It would have been wiped out in the election if allowed to complete its term. But the then opposition overthrew the government of Prime Minister Imran Khan, which has immensely benefited him. He has become the most popular leader in Pakistan and is all set to sweep the next general election.

The main reason behind his popularity is policies of the current government, which hiked prices of essentials beyond their threshold level. Inflation in February was the highest in Pakistan’s history. According to the Pakistan Bureau of Statistics, inflation in the country reached an all-time high of 31.6pc in February on a year-on-year basis following a hike in fuel prices, interest rates and import constraints. According to the data, the Consumer Price Index (CPI) increased to 31.5pc on a year-on-year basis. The YoY headline inflation increased by 27.6pc in the previous month and 12.2pc in Feb 2022. On a month-on-month basis, it increased to 4.3pc in Feb 2023 as compared to an increase of 2.9pc in the previous month and an increase of 1.2pc in Feb 2022. The main contributors to high inflation were food, beverage and transportation prices, which surged by more than 45pc. Other major contributions were natural gas prices (62.82pc), LPG 35.55pc, motor fuels 16.53pc, cigarettes 15.64pc and construction input items 5.51pc.

According to the finance ministry, inflation will remain high in the coming months before easing out gradually. In its monthly Economic Update and Outlook report, the ministry expected that inflation would remain around 28 to 30pc in the coming months. “The key reasons are uncertain political and economic environment, pass-through of currency depreciation, a recent rise in energy prices and increase in administered prices. Although the SBP has adopted a contractionary monetary policy, the inflationary expectation would take some time to settle,” it noted.

In a bid to curb inflation, the State Bank of Pakistan (SBP) increased the interest rate by 300 basis points (bps) to 20pc — the highest since October 1996. The central bank said the decision reflected the “deterioration in the inflation outlook” and its expectation amid recent external and fiscal adjustments. “This outlook warrants a strong policy response to anchor inflation expectations around the medium-term target of 5-7pc,” it stated. The SBP noted the reduction in the current account deficit (CAD) was important but required concerted efforts to improve the external situation, emphasising that any significant fiscal slippage would undermine monetary policy effectiveness in the context of achieving price stability. The bank said its Monetary Policy Committee (MPC) had highlighted near-term risks to the inflation outlook from external and fiscal adjustments. “Most of these risks have materialised and are partially reflected in the inflation outturns for February. The national CPI inflation has surged to 31.5pc year-on-year, while core inflation rose to 17.1pc in urban and 21.5pc in a rural basket in February 2023,” it noted.

The central bank observed that recent fiscal adjustments and exchange rate depreciation had led to a significant deterioration in the near-term inflation outlook and a further upward drift in inflation expectations. “The committee expects inflation to rise further in the next few months as the impact of these adjustments unfolds before it begins to fall, albeit at a gradual pace,” it said.

According to the reports by the finance ministry and the SBP and expert estimates, prices will continue to increase in the country because of internal and external reasons. The performance of a government in the world is assessed by prices and creation of job opportunities. If measured by this international standard, this government will be remembered as one the worst in Pakistan’s history.