Asian Development Bank's analysis shows that a 10 per cent increase in food prices could drive an additional seven million into poverty in Pakistan; a 20 per cent increase, 14.7 million; and a 30 per cent increase would add 22 million in poors.
In a report on "Poverty and the Impact of Food and Energy Inflation", ADB experts stated that Pakistan's poverty profile has seen many swings over the last two decades. Poverty incidence was 25.5 per cent in the early 1990s, before rising to 34.5 per cent in FY2001, and declining to 23.9 per cent in FY2005 and 22.3 per cent in FY2006, according to government estimates.
Other studies have estimated it at 29.3-36.4 per cent (44 million-45 million people). Meanwhile, the latest Government estimates point to a further reduction in the poverty rate to 22.3 per cent in 2005/06. Household expenditure surveys indicate that the share of food in total expenditures is inversely related to income levels, which means that a sharp rise in food price can have a devastating effect on the poor.
Food expenditures make up an average of about 60 per cent of household expenditures of the poor in Pakistan. Food prices increased by more than 20 per cent in the first quarter of 2008, and by 32 per cent on year-on-year basis on June 2008.
ADB's analysis shows that a 10 per cent increase in food prices could drive an additional 7 million into poverty in Pakistan; a 20 per cent increase, 14.7 million; and a 30 per cent increase, 22 million. After food, the second major household expenditure is energy, the price of which increased by about 30 per cent in the first quarter of 2008.
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