Group Membersather Abdul Jabbar E10

1.
Group MembersATHER ABDUL JABBAR E10-013QAZI MUHAMMAD UBAID E10-078

2. 2. Inflation Impact onEconomy of Pakistan
3. 3. What is Inflation?An increase in the amount of currency incirculation, resulting in a
relatively sharp andsudden fall in its value and rise in prices.
4. 4. Types of Inflation Demand Pull Inflation Cost-push inflation Pricing Power Inflation
Sectorial inflation Built-in inflation
5. 5. Causes of Inflation Excess money printing High Production Cost International lending
and national debts Federal taxes
6. 6. Effects of Inflation Negative Effects Positive Effects
7. 7. Negative Effects It is difficult for consumers to purchases more goods. It generates very
bad effects on the poor labour force. Inflation reduces the living standard and
purchasingpower of people. Causes an increase in tax bracket
8. 8. Positive Effects There is more investment in country at the time ofinflation. Inflation
increases the economic activities that may causeto inventions and innovations. Profit of the
producers also increases when there isnormal inflation. It can benefit the cartels.
9. 9. How to survive Inflation..???? Be wise when holding cash. Be careful when buying
bonds. Invest in things that youre going to use anyway and willserve you for a long time.
Learn about bartering. Ask yourself, do I really need these things Im spending mymoney
on?
10. 10. Inflation Impact on Economy of Pakistan Rise in price of oil and gas. Secondary
measures from government. Standard of living. Erosion of quality.
11. 11. Rise in prices of oil and gasIn Pakistan, the most important thing is the rise in prices ofoil,
gas, excise duties and the increase in the utility tariffs.These all has an inflationary impact on
the economy.
12. 12. Secondary measures fromgovernment Government claims that in order to keep the
prices ofessential commodities under control, it has been takingvarious measures throughout
the year. Unfortunately, in Pakistan, these core problems havenever undergone such a
planning process.
13. 13. Standard of living Inflation always hurts ones standard of living. People have to pay
more for the same goods and services.
14. 14. Erosion of qualityIn a competitive environment, where demand and supplyforces
predominantly influence price movements, anyattempts to keep the prices down artificially
results in adilution of quality and in some cases quantity (whicheffectively means no real
change in price).
15. 15. Example!Take the example of rugs produced in Gakkhar Mandi. Thetown used to
produce very high quality rugs, which were notonly used throughout the country but were
also exported.The producers found out that the demand for rugs was highlyprice elastic.
16. 16. Inflationary factors in Pakistan Supply side shocks. Rising trade deficit. Rising import
prices. Indirect taxes.
17. 17. Supply side shocksSupply side shocks can cause large fluctuations in food andoil prices,
effects of which on overall inflation, at times, canbe so excessive that these cannot be
countered throughdemand management, including monetary policy.
18. 18. Rising trade deficit The expectations effect is very important since there is adanger that
the current high rate of inflation can getlocked into expectations of inflation. All this can have
devastating effect for the prices.
19. 19. Rising import prices Rising import prices are also considered an importantfactor for
inflation. Exchange rate, if depreciating canalso put upward pressure on price level.
Increase in prices of goods, such as petrol, raw materialetc. makes our imports costlier,
impacting on cost ofproduction.
20. 20. Indirect TaxesSimilarly, indirect taxes are also blamed as the main causeof inflation. The
indirect taxes, such as sales tax and exciseduties raise the prices of consumer goods. This
createsinflationary pressure. On the other hand, direct taxes reducethe take-home income
and have anti-inflationary effect.
21. 21. Price indices in Pakistan Different price indices are used in World over the courseof
fiscal year, namely: the Consumer Price Index (CPI), theWholesale Price Index (WPI), the
Sensitive Price Index(SPI). The CPI is the main measure of price changes at theretail level.
It covers the retail prices of 374 items in35major cities and reflects roughly the changes in the
costof living of urban areas.
22. 22. Flaws in measuring Inflation inPakistan Measurment is only on the basis of CPI
23. 23. Graphical Analysis of Inflationfrom 2008 to 2012 Using CPI
24. 24. Inflation rate in 2008
28. 28. ConclusionInflation effects the different sectors of the economy(Effects on the distribution
of income and wealth, Effects onproduction, Effects on the Government, Effects on
theBalance of Payment, Effects on Monetary Policy, Effects onSocial Sector, Effects on
Political environment) and differentclasses of the people (Debtors & Creditors, SalariedClass,
Wages earners, Fixed income group, Investors andshareholders, Businessmen,
Agriculturists).
29. 29. Recommendations Controlled by strategic planning. Domestic production should be
encouraged. Development in agricultural sector. Strong monitoring system on different
levels.
30. 30. References http://www.articlestudy.com/2010/04/20/inflation-in-pakistan
http://en.wikipedia.org/wiki/Economy_of_Pakistan http://en.wikipedia.org/wiki/Inflation
http://www.finance.gov.pk/admin/images/survey/chapters/07-inflation09.pdf
http://www.imf.org/external/pubs/ft/wp/2006/wp0660.pdf

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