Rising Inflation and Economic Pressures in Pakistan
The persistent rise in inflation has become a major concern for businesses and households across Pakistan. The Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel (BMP) has highlighted the growing economic pressures caused by increasing utility charges and rising food prices, which are affecting both consumers and industries.
According to recent data from the Pakistan Bureau of Statistics (PBS), the Sensitive Price Indicator (SPI) for the week ending August 13, 2025, increased by 0.31 percent on a weekly basis and recorded a year-on-year rise of 2.21 percent. These figures indicate a gradual but noticeable inflationary trend that is impacting essential commodities and household necessities.
Mian Anjum Nisar, former president of FPCCI and chairman of BMP, expressed serious concerns about this inflationary trend, calling it unsustainable for both consumers and producers. He pointed out that the government’s policy approach has shifted the burden of fiscal reforms and energy adjustments onto the public and private sectors without implementing protective measures. The removal of energy subsidies and subsequent tariff increases have made living costs more expensive for households while also increasing production costs for industries, creating a dual challenge for the economy.
On an annual basis, the SPI’s 2.21 percent rise reflects steep increases in key non-perishable items and services. Gas charges for the first quarter rose by nearly 30 percent, sugar prices surged 22.83 percent, and footwear, particularly ladies’ sandals, jumped 55.62 percent. Other items witnessing significant year-on-year increases included beef, pulses, vegetable ghee, gur, firewood, cooked beef, cooked daal, and diesel. While some relief was noted in other essential food items, such as onions, tomatoes, garlic, wheat flour, potatoes, and select pulses, the moderation was not sufficient to offset the broader inflationary trend.
Anjum Nisar noted that the pressure of rising prices is being felt across all income groups. Weekly SPI changes affected households uniformly, with a marginal difference across consumption quintiles. The lowest-income group (Q1) faced a year-on-year price increase of 2.22 percent, while the highest quintile (Q5) experienced a smaller rise of 1.46 percent. Despite the relatively contained headline inflation compared to previous years, he warned that persistent price increases in protein-rich items, condiments, and utilities could erode household purchasing power if the trend continues.
Structural Challenges and Inflation Drivers
Highlighting the structural challenges underlying these developments, Nisar attributed the surge in inflation to international energy price movements, domestic utility tariff adjustments, and ongoing disruptions in the food supply chain. He emphasized the urgent need for comprehensive agricultural reforms to stabilize food availability, greater investment in storage and logistics infrastructure, and improved coordination between federal and provincial authorities to manage market fluctuations. Without such measures, he cautioned, households would face mounting financial stress and industries would struggle with rising operational costs.
According to the PBS report, the week-on-week rise was mainly driven by sharp increases in perishable and protein-rich items. Tomatoes led the surge with a staggering 12.62 percent jump, followed by chicken, which rose 4.68 percent, and eggs with an increase of 2.11 percent. Household energy costs were not spared as firewood prices edged up by 0.17 percent, reflecting the broader inflationary pressure on day-to-day living expenses.
Conversely, Liquefied petroleum gas (LPG) dropped slightly by 0.36 percent, while other items such as 1kg vegetable ghee, powdered salt, and Irri-6/9 rice registered minimal dips. Overall, of the 51 items tracked in the SPI basket, 17 items increased, nine decreased, and 25 remained unchanged, signaling a mixed yet modestly inflationary pattern in consumer prices.
Broader Economic Implications
The BMP chairman also highlighted the broader economic implications, noting that rising prices, coupled with declining industrial output and exports, could slow economic momentum. He pointed to shrinking private sector borrowing, reduced foreign direct investment, and declining manufacturing activity as indicators of growing economic fragility. Anjum Nisar stressed that unless corrective steps are taken, Pakistan risks entering a prolonged period of stagflation characterized by slow growth and sustained inflation.
While acknowledging the importance of fiscal reforms, Anjum Nisar urged policymakers to adopt a balanced approach that protects vulnerable households and supports industrial growth. He called for targeted subsidies for low-income families, special energy pricing for export-oriented industries, and measures to improve supply chains for essential commodities. The BMP warned that ignoring these steps could deepen inequalities, further erode consumer confidence, and constrain the country’s economic recovery.
As Pakistan faces the combined challenges of rising utility costs and persistent food price increases, the SPI data serves as a reminder of the economic pressures confronting households and industries alike. The BMP’s warnings underscore the urgency of coordinated policy interventions to address inflation while fostering conditions that allow both consumers and producers to navigate the evolving economic landscape without undue hardship.
