The Numbers: Rs 100 Then vs Now
Using Pakistan Bureau of Statistics CPI data, here's what Rs 100 spent in 2010 would cost in each subsequent year. The cumulative effect is staggering.
| Year | Annual Inflation | Equivalent of Rs 100 (2010) |
|---|---|---|
| 2010 | — | Rs 100 |
| 2012 | ~11% | Rs 122 |
| 2014 | ~8% | Rs 143 |
| 2016 | ~4% | Rs 158 |
| 2018 | ~5% | Rs 174 |
| 2020 | ~10% | Rs 210 |
| 2022 | ~21% | Rs 288 |
| 2023 | ~29% | Rs 372 |
| 2024 (est.) | ~20% | Rs 446 |
📉 In plain terms: what cost Rs 100 in 2010 costs around Rs 446 today — a 346% increase in 14 years, or an average of 11% per year compounded.
The Food Inflation Problem
General CPI understates the pain for most households. Food inflation — which hits lower and middle-income families hardest — was even more severe:
- Flour (atta): Rs 35/kg in 2019 → Rs 130–160/kg in 2023.
- Cooking oil: Rs 180/litre in 2020 → Rs 500–600/litre in 2023.
- Chicken: Rs 180/kg in 2020 → Rs 480–550/kg in 2023.
- Tomatoes: Sometimes hit Rs 400/kg at peak in 2023.
Food accounts for 35–40% of a typical Pakistani household's spending, so food inflation has a disproportionate real-world impact.
Why Did Inflation Get So Bad?
Multiple factors combined to create the 2022-23 inflation crisis:
- Rupee devaluation: The PKR fell from ~160/USD in 2021 to ~300/USD in 2023, making all imports — fuel, food, fertiliser, machinery — far more expensive.
- Fuel price increases: The removal of fuel subsidies added to transport costs and fed into everything else.
- Global commodity surge: Post-COVID supply chain issues and the Russia-Ukraine war pushed global food and energy prices up.
- Fiscal expansion: Money supply grew faster than economic output for years.
- Power tariff hikes: Electricity prices tripled, raising production costs across the economy.
Is It Getting Better?
Yes — gradually. The SBP raised its policy rate to 22% in June 2023, its highest ever, specifically to fight inflation. By mid-2024 inflation had fallen to around 12–15%, and the SBP began cutting rates. As of late 2024, the policy rate is around 17–18% and falling.
However, prices for most goods don't fall when inflation drops — they just rise more slowly. The purchasing power already lost is gone.
How to Protect Your Money from Inflation
Keeping savings in a regular bank account earning 5–8% while inflation runs at 20% means your real wealth shrinks every year. Here's how to defend yourself:
1. Keep savings in instruments that beat inflation
- Money market funds currently yield 18–20% — above current inflation.
- T-Bills (government securities) are accessible through NAYA Pakistan Certificate and bank platforms, yielding 16–20%.
- National Savings offer 12–15% — below current inflation but government-guaranteed.
2. Invest in real assets
- Property has historically kept pace with or beaten inflation in Pakistan.
- Gold is a classic inflation hedge — PKR gold prices rose ~40% in 2023 alone.
- Equity / stocks — KSE-100 returned 54% in FY2024, beating inflation handily in recent cycles.
3. Reduce high-interest debt
Carrying consumer debt at 25–30% during high inflation is a double burden — inflation shrinks your real income while debt payments stay fixed. Pay down expensive debt before aggressively saving.
🔑 The rule of thumb: never hold large amounts in a savings account earning less than the inflation rate. Even a money market fund is better than a low-yield current account.