Inflation perception survey: Rising price hike linked to political instability

ISLAMABAD: An overwhelming majority of 71 per cent of the country has reckoned political instability as the major cause behind the current high inflation in the country while 45 per cent of the respondents linked it with increased repayment to foreign debts and 44 per cent respondents referred to declining exports, revealed the inflation perception survey conducted by the Sustainable Development Policy Institute (SDPI).

Releasing the results of the survey, the Executive Director of SDPI, Dr Abid Qaiyum Suleri, here on Friday said that 34per cent of the respondents mentioned the decrease in remittance, and 30per cent of the surveyed identified rising imports as factors that are impacting the reserves.

On the basis of the above findings, Suleri said if the above indicators are improved, the foreign exchange reserves will improve too.

He said that the Inflation Perception Survey April 2023 was conducted nationwide using a structured questionnaire to collect quantitative data on participants’ perceptions of inflation, inequality, and subsidy distribution.

Using random sampling techniques, the survey was conducted among 1,200 sample size through telephonic and online interviews.

The respondents in the provinces from 68per cent to 81 per cent identified political instability at the top. On falling exports, 48 per cent of respondents from Sindh followed closely by Balochistan and Punjab viewed that exports decline is impacting the forex.

Rising imports are a concern in all provinces, with percentages ranging from 25 per cent in Punjab to 37per cent in Sindh.

Increased repayment of external debt is also a significant issue in all provinces, with Sindh having the highest percentage at 50per cent, followed by Khyber-Pakhtunkhwa and Punjab. Finally, a decrease in remittances is observed in all provinces, with 36per cent in Punjab.

According to the inflation perception survey data, 63per cent of the respondents perceive “economic default” as the most significant risk, followed by 44per cent of the respondents who perceive political instability and 41per cent think rising inflation as the third biggest risk for the country over the next six months.

Moreover, almost half of the respondents, 49per cent, view unemployment as a critical risk. The reduction in the supply of essential commodities and closure of local industries are also identified as risks, although the percentages are relatively low at 14 per cent and 21 per cent, respectively.

The province-wise perception of the biggest risks for Pakistan in the next six months is reflected in the data for all provinces. Economic default is the most significant risk, with high percentages observed in all provinces ranging from 57per cent to 66per cent. Rising inflation is the second most significant risk, observed in three provinces, with the highest percentage in the federal capital Islamabad at 50per cent.

Unemployment is the third most significant risk, observed in all provinces, with the highest percentage in Islamabad at 77per cent. Political instability is another risk observed in all provinces, with the highest percentage in Balochistan and Islamabad at 55per cent and 50per cent, respectively.

Finally, the reduction in the supply of essential commodities and the closure of local industries are also perceived as risks in some provinces.

The survey data shows that 52.7per cent of households expect a decrease in income, indicating that they may face financial difficulties. Meanwhile, 66.6per cent of households expect an increase in expenditure, which suggests that they may struggle to manage their expenses.

The survey also reveals that 63.1per cent of households expect an increase in financial stress, indicating that people are concerned about their ability to make ends meet. Furthermore, 53.6per cent of respondents anticipate a decrease in Pakistan’s GDP, which could have significant implications for the economy as a whole.

Regarding employment, 72.4per cent of respondents expect an increase in unemployment, which could lead to a rise in poverty and inequality. The majority of people also expect an increase in public debt, with 58.2 per cent of respondents anticipating this.

Additionally, 78.9per cent of respondents expect an increase in the dollar rate, while 77.6per cent anticipate an increase in petrol prices, which could further impact people’s ability to afford basic necessities.

The survey also reveals that financial stress on households is expected to increase in all provinces except Islamabad. In Punjab, 67.2per cent of households anticipate an increase in financial stress, followed by Khyber-Pakhtunkhwa at 68.5per cent, Sindh at 59.0 per cent, and Balochistan at 57.7per cent. In terms of employment, the survey indicates that people in all provinces anticipate an increase in unemployment.

The highest percentage of the expected increase in unemployment is in Islamabad at 92.3per cent, followed by Punjab at 77.1per cent, Khyber-Pakhtunkhwa at 72.3per cent, Sindh at 73.3per cent, and Balochistan at 63.1per cent. Furthermore, people in all provinces, except for Punjab, expect an increase in public debt.

The highest percentage of the expected increase in public debt is in Islamabad at 61.5per cent, followed by Khyber-Pakhtunkhwa at 57.7per cent, Sindh at 53per cent, and Balochistan at 51.9per cent.

Lastly, people in all provinces, except for Punjab where there is a slight expected decrease, anticipate an increase in both the dollar rate and petrol price. Islamabad has the highest percentage of the expected increase in both the dollar rate and petrol price at 80.8per cent and 92.3per cent, respectively.

Based on the survey data, a significant portion of the respondents in Pakistan perceives the current level of inequality in the country to be very high, with 46.3per cent of respondents indicating so. Another 24.5per cent of respondents rated the level of inequality as high.

A smaller proportion of respondents, 12.2per cent, perceived the level of inequality as moderate. Only 10.1per cent of respondents rated the level of inequality as low, and just 6.9per cent rated it as very low.

Copyright Business Recorder, 2023