Sunteți pe pagina 1din 9

Comparison of inflation in Pakistan with

SAARC countries
I ntroduction:
Inflation is a global phenomenon is different at different time scenario has been a problem in
economy. It is difficult to find any country in world today which is not lacerated by the demon of
inflation. In Pakistan the level of inflation is continuously rising whereas the high levels of
inflation shows volatile economy in which money does not hold its value for a long time. workers
demand higher wages to meet the rising costs, scale back production to check their costs , or fail
to invest in future production .Pakistan is facing many problems regarding to inflation the
factors that leads to high inflation are Decelerating Economic growth, Loose monetary policies,
Output set-backs, Higher duties and taxes, Depreciating Pak Rupee, Frequent adjustments in the
administered prices of Gas, electricity, POL (Petroleum, Oil and Lubricants) products Frequent
adjustments in support price of wheat Political instability
Background:
SAARC stand for South-Asian Association for Regional Cooperation was was established on
December 8, 1985,the Charter was officially accepted by the Governments of Bangladesh,
Bhutan, India,Maldives, Nepal, Pakistan and Sri Lanka. Some of the main objectives of this
association is define as according to his chater: a) to accelerate economic growth, social
progress and cultural development in the region and to provide all individuals the opportunity to
live in dignity and to realize their full potential, and b) to promote active collaboration and
mutual assistance in the economic, social, cultural, technical and scientific fields. Regional
cooperation serves to promote the bilateral and multilateral relations of the SAARC Member
States.
The pattern of I nflation rate in Bangladesh
The average inflation in Bangladesh in year 2000 was 1.94% while in 2011 was 9.76% during
10 years the pattern of inflation was not monotonic. The BBS shows that the increased inflation
was 11.9% on monthly account in September, which was the highest rate of inflation in 10 years.
Food inflation was about 12.7% in august while in September was 13.90& but on urban area the
food inflation had increased up to 14.69% in the same month from 12.49% in august. The
nonfood sector was not weak behind in the rate of increase, which visibly shows on above figure
within one year also the prices of food items, house rent, transport cost, and expenditure on
clothing and shoes have also increased. As a result, people are facing amid hardship. in
financial year the government plan to keep inflation rate at 7.5% but it has crossed the limits. when food
prices increase the price of other goods also increased. Increase in expenditure on purchasing food item relatively
increase the house rent. as a result there is an abnormal increasing rate of prices of nonfood item
Table: General, Food & Non-food Inflation Rate in Bangladesh during FY 2001 to FY2011
Year General (%) Food (%) Non-food (%)
Point to Point Monthly
Moving Average
Monthly
Moving Average
Monthly
Moving Average
2000 - 1.94 1.39 3.04
2001 - 2.79 1.63 4.61
2002 3.58 2.79 1.63 4.61
2003 5.03 4.38 3.46 5.66
2004 5.64 5.83 6.92 4.37
2005 7.35 6.48 7.91 4.33
2006 7.54 7.16 7.76 6.40
2007 9.20 7.20 8.11 5.90
2008 10.16 10.06 11.43 7.35
2009 4.60 5.51 7.9 4.2
2010 7.61 7.52 9.9 3.9
2011 11.97 9.76 13.90 4.32

The internal & external factors both have influence on current inflation in Bangladesh while Bangladesh is not self-
sufficient in terms of production food commodities, it depends on external markets for rice & wheat , pulse, edible
oil, milk-products and other essentials. In fy 05-06 the country produced 31.45 MMT food grain while it imported
2.56 MMT cereals. for consumption of oil & other petroleum products the country depends upon foreign market
because it has sizeable amount of gas which only produced 10% of its oil consumption. Despite the fact internally
an increased in the production food over the year its hard to match the demand which remains regular mostly
owing to the countrys development accumulation

In past year rice
production in the country
was weak except for the
BORO high yielding variety
rice also decline in the
production of wheat over
the years where as
production of oilseeds,
pulse also decline
drastically but increase in
vegetable production
while crop failure due to
poor weather often create
shortage of food. As a
result domestic production
of food was not sufficient to fulfill the demand, the gap in demand & supply of edible oil, cereals & other food items
was imported from foreign market.
The market mechanism of Bangladesh is highly distorted , the gap between retail and wholesale market price is
related & also believe that grouped of traders has control the markets through syndication. The government has
taken some serious actions towards monopoly of the commodity traders& those who are engaged in hoarding
activities. . However, some of its measures have proven to be compensating for and indeed encourage the price
hike. The drive against the so-called unscrupulous business people has greatly handicapped the commodity imports
The Pattern Of I nflation I n Srilanka
In Srilanka inflation is measured by Colombo consumer price index (ccpi). The inflation rate in
2003 is approximately 9% while it was decrease by 7% in 2009. It has been decreased further
more in 2005 by 5% but in 2006 -07 it was increased by 1%. According to ccpi inflation rate is
increase by 4.8% during a year and 3.7% was increased on annual basis.in 2009 the decline in
inflation significantly upon both demand and supply. The prices has been increase of
domestically produced goods which average about 72% of control monthly consumption
expenditure, a huge impacted in inflation during the year. a great impact of inflation has been
seen on food & nonalcoholic sub index with 46.7% in the ccpi. The decline in prices of rice,
pulses, vegetables & coconuts due to increase condition of domestic supply which decline the
prices. The monetary policy in conducted by central bank in order to maintain price stability to
control inflation. wpi showed the inflation at primary market level with high volatility in09. On
annual average basis wpi is declined by 4.2 % . The second lowest inflation rate in srilanka is
5.9% in 2010.the year on year inflation stood at 6.9% in Dec 2010 the reason of lower inflation
is improvement of domestic supply conditions due to favorable improvement of agricultural
sector. The government relaxation of import imposes on some goods which helped the domestic
inflation from rising due to increased price in global market.
0
2
4
6
8
10
12
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Annual CPI inflation rate in
Bangladesh
Bangladesh

The reason of low inflation also belongs to unchanged prices of petrol & diesel during the year
& good monetary policy. In accordance to the monetary policy, the impact of high imports price
on consumer prices was somewhat mitigated by the slight appreciation in the exchange rate of
the Sri Lankan rupee which was about 1.7 percent against the US dollar on average in 2010. Sri
Lanka's 2011 economic growth is likely to come slightly below an earlier expected 8.3 percent
and inflation will be below 6.0 percent. Sri Lanka's inflation has been checked with a stable
exchange rate acting as an external anchor for inflation though there was a devaluation of about
3 percent of the exchange rate in November. But Cabraal said year-end inflation is expected to
be below 6.0 percent.
The Pattern Of I nflation I n Nepal
Regarding to the data of NEPAL RASTRA BANK the causes of inflation based on august & September 2009 the
actual CP has offers moderation order to 9.7% in mid sept 2009against in which of 13.5% in the same period
recently. Unexpected increase have taken place in price indices regarding to vegetables along with food at 43.5%
sugar related items at 40.5%,beef at 29% as well as grains/cereals with 5.8%. in comparison to the last year same
interval, this season grains/cereals witnesses a very faint boost whereas other above areas tremendous increase
have taken place.in the same manner, price index of transport and verbal exchange declined by simple 8.7% while it
had boost by 23.1% a last year in the identical period. Generally the consumption habit associated with Nepal is
more westernized each day. In economy the more than excess of 65% of the population is actually below 35 years
of age. the more radiant generations area way in advance in purchasing consumer durables along with canned
food items. Because of heavy tax rise inflation due to the fact when individuals have cash flow a piece of dollar is
choked out to government, on top of that the identical applies when purchasing. Money is printing, yearly when
government is short of money; it has rights to print all the money seeing that required. If it cant compensate, the
0
5
10
15
20
25
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
CPI annual inflation rate in Srilanka
Srilanka
more money printed every year comes to people by means of tax. Whereas Nepals economic system is being
influenced by INDIA.ANOTHER SIMILAR ASPECT IS NEPALS ECONOMIC SYSTEM ESPECIALLY LARGELY RELYING ON
India .slow growth in GDP. If the growth within GDP does not go through out par while using the excess income
printed, this shortage will be filled inside by inflation.

The Pattern Of I nflation I n I ndia
Rising inflation probably prevail through FY2004 along with2005. Inflation is showed 5.7% and 6.8%,largely
because of rising price of oil & agricultural commodities within FY2004 and predicted escalation in the price of
manufactured goods in FY2005.Manufactureswho are currently absorbing the increase in costs by reducing the
profit will ultimately pass this on to consumer, leading to some lagged in industrial price in Y2005 due to escalation
of price in FY2004.the government entities has considered short-term actions to retain the impact on consumer
prices, by reducing the excise and customs duties on oil product in SEPT. For the future, the government is
contemplating o proper oil reserve so as to moderate oil essential price volatility by mean of buffer stock
operations. Inflation in India remains to rising. Among March 2006-2007, year-on-year WPI inflation excluding food
& also energy rose from 2% to 7.9%. Main symptoms of inflation place one way price challenges. Excess potential
has shrunk to a some14 year slow. Here discover the sign of overheating in real estate& labor markets with reviews
showing the salaries of skilled workers increasing through15% yearly. The public distribution system has nearly
collapsed as well as the means which will available at least in theory to guard poorer.in 2007-08 the inflation rate is
4.1% this was lower as compared to 5.6% rate of inflation in last year because inflation in India have been led by
primary nonfood item.
Prime contributors of inflation within group. But in the FY2007-08 will be the fuel& energy group. But decline in the
inflation rate of investment goods via 5.6% to 4.3%.FY2007-08 has showed that the investment climate within India
is motivating. Although prices happen to be falling since March 2007, there is some rise in prices within the last
couple of weeks. Rise in the price of associated coal & crude oil include because price to rise was accompanied by
0
2
4
6
8
10
12
14
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Annual inflation rate in Nepal based on CPI
Nepal
the rise at the same time of diesel and fuel. Inflation has become a concern area of Indian economy. The decline in
inflation is being considered a positive sign. Economic growth decrease to 6.7% in 2008-09 when compared to 9% in
2007-08 in addition to 9.7% in 2006-07.per capita growth at4.6%. deceleration with growth propagate across
many sectors besides mining & quarrying ,agricultural growth decline from 4.9% in 2007-08 to 1.6% in 2008-
09.production grows from 2.4% slow down caused by decline in exports along with decline in domestic demand.
Global financial meltdown economic recession in developed economic factors in Indias slow down investment
remains comparatively buoyant rate of fixed investment to GDP improved to 32.2% in 2008-09 in comparison with
31.6% in2007-08.fiscal deficit to GDP ratio stands with 6.2%. credit growth decrease from the later section of 2008-
09 showing slowdown of the economy on the whole & the industrial sector for e.g. increased programs expenditure
cut of indirect fees, sector certain measures intended for textile, property, infrastructure as a result of stimulus
plans provides support towards real economy. Merchandise export grows with a modest 3.6% in USDOLLAR terms
while entire import growth pegged from 14.4%. a substantial domestic market resilient banking system along with
a liberalization regarding capital account to early migration with the adverse influence of global economic crises &
economic depression. Sharp dip inside the growth regarding private consumption an essential concern during this
point. Medium in order to long term cash flows probably be lower so long as de-leveraging continues in US
economy. Returning to goal of impending economic reforms essential to replenish the growth momentum.

Comparison Of I nflation I n Pakistan With SAARC countries
In past inflation rate in Pakistan seemed to be quite low however it accelerated in 2003. Because of the crises in
1998-99 inflation continues to be reduced to below 5% through 2000 to 2003 the main reason of low inflation rate
environment, during this era was ended up being tight monetary policy combined with fiscal consolidation
compared with food inflation in Pakistan . using Bangladesh , its showed that will from 2000the food inflation stood
low because method of getting food related food items has been improved like tomatoes, onions, oranges&
vegetables. On 2004 Pakistan, as a result of increase in global cost of energy which easily affect the overall prices of
other commodities. Comparing the various growth rates in prices with India. There are some variations as Pakistan
data is coming from 2003 onwards as well as India by 2004 which based on WPI. Pakistan data is based on CPI
where as India data is based on WPI
Price in India is increased much faster than Pakistan. India has better performance in controlling inflation than
Pakistan.Due to monetary growth in Pakistan which followed and increased sharply at 11% year on year in April
2005 devaluation of currency has also affect the rate of inflation where government policies also result in
devaluation of currency. Inflation Pace was full of 2008 mainly because of increasing food costs, Devaluation of the
rupee from the dollar as well as political unrest along with deteriorating rules and obtains situation get all
hampered authorities efforts for you to stabilize home prices through 2008-09.
Due to the adoption of tight monetary policy and improved supply situation of essential items the inflation came
down to 3.4 percent in the year 2000. However during the year 2000-2001 the inflation rate as measured by the
consumer price index increased to 4.7 percent. The main reason for the increase in the inflation are higher oil price
and upward adjustment of gas and electricity tariffs, increase in the prices of essential food items such as sugar
pulses and tea and by increasing in the communication and transport prices. So the government is trying to
decrease the inflation rate and giving the subsidies to some special sectors who are the major contributor of the
inflation. So this is how inflation increased in the Pakistan.

Pakistan has been able to contain inflation pace within single digit during last past years which is leaner than the
regional SAARC countries. The year on year inflation rate of Pakistan or CPI noted an increase of 7.9% in Dec 2012
as compared to past years. The CPI within India was 9.2% & followed by means of 9.2% in srilanka. However it
enhanced by 7.2% in Bangladesh. The cost comparison associated with essential consumer items such as wheat,
0
5
10
15
20
25
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
A
x
i
s

T
i
t
l
e

Chart Title
Srilanka
Bangladesh
Pakistan
india
Nepal
grain flour, rice, sugar along with red chilies on Dec 2012 which shows that their prices are lower than SAARC
countries. Where only the price of diesel is higher in Pakistan than SAARC countries as shown in below table.
Countries
Name
Price of
wheat
Per kg
Price of
sugar
Per kg
Price of
rice
Per kg
Price of
mutton
per kg
Price of
beef per
kg
Price of
petrol
Price of
diesel
Pakistan 114.1 102.65 109.77
India 163 120.07 84.22
Bangladesh 188.8 108.85 74.61
SriLanka 132.5 - -
Afghanistan 171 - -
But in the current scenario the CPI inflation is increased in Pakistan as compared to south Asian Countries in 2013.
Conclusion:
Inflation is often a general increase in price of commodities in a particular time frame. In
inflation excess amount of money purchases too little goods. Inflation is normally caused by
means of rise in demand, supply and also increase in money supply. Black money make use of
age, rise in Govt expenses, growth in the private sector may also be the reason of increased
inflation. Inflation is usually increasing the rate of poverty & also unemployment rate in
Pakistan. The costs of merchandise & services are rapidly increasing throughout Pakistan& that
is affecting the life style in people of Pakistan. Inflation is actually reached up to the threat level
in Pakistan that is lowering the actual rate of countrys economic growth. Inflation is usually
disturbing the particular diverse aspects of economy. The result of inflation on the distribution of
income and employment opportunities is long lasting. The pattern of production in country is
terribly disturbed in Pakistan caused by increasing inflation. The adverse effect of inflation
within the balance of payment cant be ignored. The individuals belong to every class such as
salary base, businessman, labor base, investor and agriculturists everybody is affecting on the
negative side effects of inflation. Here is so many reasons of inflation in Pakistan among the
major cause is that Govt.of Pakistan is printing excessive currency notes to perform the
government business in order to complete the actual projects without any amount of regarding
reserves equals towards the value of currency notes. The surplus of money is raises different
groups of economy got more money to spend while production sector in the economy fail to
produce the items to match the buying requirements of economic system. Some other main
reason of inflation with Pakistanis usually an increase in the production expense which in result
causes the increase prices of goods. The cost of labor increased and revenue margin has been
decreased as well as the over prices of the finished goods rise. The indirect taxes has been
imposed by the Government also contributing to boost the rate of inflation in Pakistan

S-ar putea să vă placă și