One of the most important factors contributing to poverty in Pakistan is inflation. The last five year of Pakistan’s economy were regarded as highly inflationary periods due to an expansionary monetary policy and high oil prices. Inflation is one of the major obstacles in the way of the development of an economy. Inflation rates were recorded at 13.04 percent in April 2011. From 2003 till 2010, the average inflation rate was 10.15 percent. Inflation adversely affects the overall economic growth, financial sector development and exposes the poor to exploitation. Inflation also erodes real income and induces uncertainty among investors.
Inflation needs to be controlled in Pakistan through strategic planning. Use of domestic products should be encouraged, investment in the production of essential commodities should be focused on instead of on the production of luxuries, the agricultural sector should be given subsidies, foreign investment should be encouraged and developed countries should be requested for financial and managerial assistance.
UsmanK
Karachi
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