8/8/2019 Inflation Presentation Mnp

1/15

BY SIDRA AIMAN

BSS-V

8/8/2019 Inflation Presentation Mnp

2/15

CONTENTS Definition

Methods to measure inflation

Causes of inflation

Effects of inflation Role of inflation in an economy

Factual data

C

urrent scenario of inflation in Pakistan Government role in controlling inflation

Recommendations

8/8/2019 Inflation Presentation Mnp

3/15

DEFINITIO

N

Rise in the general level of prices of goods

and services in an economy over a periodof time.

8/8/2019 Inflation Presentation Mnp

4/15

METHODS TO MEASURE

INFLATION CONSUMER PRICE INDEX (CPI)

WHOLE SALE PRICE INDEX (WPI)

SENSITIVE PRICE INDEX (SPI)

Inflation

Rate =

Inflation

Rate = 100100

100

= 7.127.12%

CurrentCPI/WPI LastCalculatedCPI/WPI

LastCalculatedCPI/WPI

150 140

140

8/8/2019 Inflation Presentation Mnp

5/15

CAUSES OF INFLATION Printing excess money.

Demand-pull inflation.

Cost-push inflation.

Wage-push inflation. International lending & national debts.

Decline of exchange rate.

Federal taxes put on consumer products.

8/8/2019 Inflation Presentation Mnp

6/15

FEW OTHER FACTORS

Rapid growth in population.

Growth in private expenditure.

Increase in export.

Money reduction in direct taxes.

8/8/2019 Inflation Presentation Mnp

7/15

EFFECTS OF INFLATION Storage value and purchasing power of

the rupee decreases.

Consumption declines.

Production minimizes.

Poverty increases.

Less investment.

Low profits.

Withdrawal of money from banks.

8/8/2019 Inflation Presentation Mnp

8/15

ROLE OF INFLATION IN

AN ECONOMY Low inflation is a blessing.

More than 5% is pernicious.

Zero inflation indicates depression.

8/8/2019 Inflation Presentation Mnp

9/15

8/8/2019 Inflation Presentation Mnp

10/15

PAKISTAN GDP GROWTH

RATE

8/8/2019 Inflation Presentation Mnp

11/15

Period SPI CPI WPI

1991-1992 10.54 10.58 9.84

1992-1993 10.71 9.83 7.36

1993-1994 11.79 11.27 11.40

1994-1995 15.01 13.02 16.00

1995-1996 10.71 10.79 11.10

1996-1997 12.45 11.80 13.01

1997-1998 7.35 7.81 6.58

1998-1999 6.44 5.74 6.35

1999-2000 1.83 3.58 1.77

2000-2001 4.84 4.41 6.21

2001-2002 3.37 3.54 2.08

2002-2003 3.58 3.10 5.57

2003-2004 6.83 4.57 7.91

2004-2005 11.55 9.28 6.75

2005-2006 7.02 7.92 10.10

2006-2007 10.82 7.77 6.94

Yearly Inflation Rates ofPakistan ( 1990-91 = 100)Inflation Rates basedon SensitivePriceIndicator(SPI),ConsumerPriceIndex (CPI) and

WholesalePriceIndex (WPI) are

Note: Yearly Inflation rates for the year 1991-02 to 2000-01 are based on 1990-91=100 while

inflation rates for the year 2001-02 till to date are based on 2000-01=100

8/8/2019 Inflation Presentation Mnp

12/15

CURRENT SCENARIOOF

INFLATION IN PAKISTAN

Pakistan is facing hyper inflation

presently.

Annual inflation rate in October 2010

stood at 15.3 % .

8/8/2019 Inflation Presentation Mnp

13/15

GOVERNMENTs ROLE The State Bank of Pakistan (SBP) has

continuously tightened the monetary

policy over the last triennium and more so

in the current fiscal year. The government has relaxed its import

regime and allowed imports of essential

commodities.

The government also increased the scale ofoperations of the Utility Stores

Corporation (USC).

8/8/2019 Inflation Presentation Mnp

14/15

RECOMMENDATIONS Reduce our Government Luxury Expenses both

Federal and Provincial.

Reassess the complete system of Direct and

Indirect Taxes.

Increase the Production of Food, Industry andService things.

Should charge Capital Gain tax.

Reduce Unemployment.

Increase in Agriculture, industry. SBP should take major steps to control inflation.

Pakistan should become self reliant.

8/8/2019 Inflation Presentation Mnp

15/15

QUESTIONS?

COMMENTS?