In recent months, Pakistan’s economic policymakers have cautiously welcomed what appears to be a gradual stabilization of the country’s financial situation. Television programs and newspaper editorials have been filled with optimistic analyses pointing to three key positive developments: a measurable reduction in inflation rates, a slow but steady accumulation of foreign exchange reserves, and the successful negotiation of a new financial assistance package with the International Monetary Fund (IMF). Across social media platforms and in government press conferences, officials proudly highlight how inflation has entered single-digit territory after years of double-digit figures, presenting this achievement as concrete evidence that fiscal discipline and structural reforms are finally yielding results.
However, this official narrative of economic recovery stands in stark contrast to the daily realities faced by millions of ordinary Pakistanis across different socioeconomic strata. In the cramped homes and narrow streets of low-income neighborhoods in major cities like Lahore, Karachi, and Peshawar, families continue to implement strict rationing systems for basic food items. Staples like pulses, cooking oil, and wheat flour that were once daily necessities have become weekly or even monthly purchases for many households. Middle-class families that previously enjoyed relative financial stability now find themselves making painful choices between paying electricity bills or school fees, while putting off medical treatments until health conditions become acute emergencies – not due to carelessness, but because the costs have become prohibitive.
This glaring disconnect between the macroeconomic indicators celebrated by officials and the lived experiences of citizens forms the core of Pakistan’s deepening affordability crisis. While government reports may show inflation declining on paper, the critical question remains: have these statistical improvements translated into tangible relief for the street vendor in Sahiwal, the schoolteacher in Gujranwala, or the retired civil servant in Hyderabad? The growing gap between official economic optimism and public financial distress raises fundamental questions about how Pakistan measures progress and development.
Declining inflation rates and improving foreign reserves may satisfy international creditors and financial analysts, but these metrics ring hollow for families who still cannot afford three meals a day, for parents forced to withdraw children from private schools due to unaffordable fees, or for elderly citizens who must choose between buying medicine and paying utility bills. In contemporary economic discussions, statistical indicators often present a misleadingly simplistic picture – to truly understand Pakistan’s economic condition, we must pay attention to the more revealing but less quantifiable signals: the shrinking portions at family dinner tables, the growing queues at free medical camps, and the increasing number of empty desks in private school classrooms.
Genuine economic recovery will not be achieved when inflation reaches some arbitrary target, but when the average Pakistani can once again afford life’s basic necessities without constant financial anxiety. This requires moving beyond abstract macroeconomic measurements to focus on concrete improvements in people’s purchasing power and quality of life across all income levels.
The Illusion of Economic Ease Behind the Numbers:
The dominant narrative surrounding Pakistan’s economy remains overwhelmingly focused on technical measurements of inflation, particularly the Consumer Price Index (CPI) and Wholesale Price Index (WPI), which feature prominently in policy discussions and media coverage. These standardized indicators serve important functions for economists and policymakers by providing structured methodologies for tracking price movements across various goods and services. However, their aggregate nature inevitably masks the extreme variations that exist beneath the surface, particularly in a country with Pakistan’s pronounced economic inequalities and stark urban-rural divides.
The CPI’s methodology, which calculates inflation based on a hypothetical “representative” household’s consumption patterns, becomes fundamentally problematic when applied to a society where income distribution is so uneven. A 20% increase in electricity tariffs might represent a minor inconvenience for affluent families in Islamabad’s wealthy sectors, barely noticeable in their monthly budgets, but the same price hike can be catastrophic for low-income households in Baluchistan or rural Sindh, potentially forcing them to choose between keeping lights on or putting food on the table.
This explains why the concept of affordability – as distinct from simple inflation measurement – provides a far more meaningful and nuanced understanding of Pakistan’s economic reality. Affordability focuses not just on how prices change in aggregate terms, but on whether people can actually maintain their consumption of essential goods and services given their real income levels. A 10% annual inflation rate might sound relatively modest in economic bulletins, but its actual impact varies enormously across society – from minor lifestyle adjustments for the upper class (like dining out less frequently) to severe deprivation for the working poor (like eliminating meat from diets entirely or taking children out of school).
This critical distinction reveals why an overreliance on macroeconomic indicators can lead to dangerously incomplete policy decisions. Economic stability that doesn’t translate into improved affordability for most citizens remains an empty achievement – statistical window dressing that conceals continuing hardship. Unless government policies specifically account for how different economic segments experience price changes in radically different ways, the result will be not shared prosperity but deepening inequality and social fragmentation.
To properly assess Pakistan’s economic health, we must look beyond superficial inflation statistics and ask more probing questions: What percentage of households can still afford nutritionally adequate diets? How many families can pay for healthcare without financial distress? What portion of the population maintains stable housing without sacrificing other essentials? These affordability metrics would provide a truer picture of economic wellbeing than conventional indicators alone.
These economic realities became particularly acute following the political transition of 2022 and the subsequent implementation of stringent economic reforms demanded by international financial institutions. While these measures were technically justified as necessary to stabilize the macroeconomy and avoid default, their social costs have been severe and widespread.
The Pakistani rupee’s rapid devaluation occurred at such velocity that it completely outpaced any potential wage adjustments, effectively eroding the real value of incomes across all sectors almost overnight. Imported essentials – from edible oils and fuel to medicines and industrial inputs – transformed suddenly from affordable commodities to near-luxury items. For both salaried professionals and daily wage earners alike, carefully balanced household budgets that were already stretched thin collapsed entirely under the weight of these uncontrolled cost increases.
Simultaneously, transportation costs skyrocketed as fuel prices reached historic highs, electricity tariffs underwent multiple upward revisions that made basic utilities unaffordable for many, and critical subsidy programs that had provided a fragile safety net for vulnerable populations were dramatically scaled back to meet fiscal targets. Perhaps most insidiously, increases in indirect taxes on basic goods and services created a hidden but relentless drain on household finances that lacked the visibility of more dramatic policy changes but proved equally damaging over time.
For ordinary Pakistanis, these macroeconomic adjustments have translated into daily struggles that statistics cannot capture. In urban centers across Punjab, veteran rickshaw drivers who once supported families now park their vehicles permanently, unable to afford fuel costs. In Khyber Pakhtunkhwa’s markets, shopkeepers face eviction after decades in business as rising rents outpace declining sales. In homes nationwide, mothers stretch milk supplies by adding water and simplify family diets as nutritious foods become unaffordable luxuries.
While government balance sheets may show improvements that please international creditors, the household finances of ordinary Pakistanis tell a profoundly different story – one where macroeconomic gains come at the direct expense of human welfare. The burdens of adjustment have not been distributed fairly; those with assets have found ways to hedge against inflation, those with connections have secured protections, but for the majority – particularly the urban working class and rural populations – this era of reform has brought not promised prosperity but deepening distress and diminishing opportunities.
The true cost of Pakistan’s economic decisions since 2022 becomes most visible not in sterile statistical tables but in the daily sacrifices being made in households across the nation – sacrifices that official narratives of recovery consistently overlook.
The Silent Collapse of Middle and Working Classes:
Pakistan’s once-stable middle class is experiencing an unprecedented erosion of living standards that has gone largely unnoticed in official economic narratives focused on aggregate indicators. Salaries that comfortably covered housing, education, healthcare and occasional leisure activities just five years ago now barely suffice for basic necessities. This isn’t merely statistical inflation measured in percentage points – it’s the visible unraveling of an entire social contract that promised upward mobility through education and hard work.
The combined pressures of inflation, stagnant wages, and economic instability have created a growing population of “new poor” – households that technically remain above the poverty line but can no longer maintain what were previously considered middle-class lifestyles. Small business owners who once employed several workers now run skeleton operations. Skilled professionals take unskilled side jobs to make ends meet. University graduates drive ride-hailing vehicles not by choice but necessity.
These pressures manifest in painful lifestyle adjustments that reveal the depth of the crisis: Meat disappears from regular meals, replaced by cheaper, less nutritious alternatives. Family vacations and leisure activities become distant memories. Most tragically, children get transferred from private to government schools – not because of changing educational preferences, but pure financial necessity. “We moved our daughter to the government school down the street,” shares a father in Rawalpindi. “She cries every morning – she misses her friends and teachers. But we simply couldn’t keep up with the fee increases.” Such stories reveal how economic pressures are reshaping Pakistan’s social fabric in ways that will have generational consequences.
The collapse is particularly visible in Pakistan’s small and medium enterprises (SMEs), which have traditionally served as engines of employment and upward mobility. From textile workshops in Faisalabad to manufacturing units in Sialkot, businesses that operated successfully for decades are now closing their doors, unable to cope with rising energy costs, expensive credit, and unreliable supply chains. The informal sector, which normally absorbs economic shocks, is itself overwhelmed, leaving millions without traditional safety nets.
These trends represent more than temporary hardship – they signal a fundamental reordering of Pakistan’s social structure. The erosion of the middle class undermines the very foundations of economic mobility and social stability. When citizens lose faith that education and hard work will lead to better lives for their children, the crisis transcends economics and becomes existential for the nation’s future.
Coping in Crisis:
Daily life for millions of Pakistanis has become an endless series of difficult compromises and survival strategies as incomes fail to keep pace with rising costs. Families employ increasingly desperate measures to stay afloat, drawing down whatever reserves they have and redefining what constitutes “essential” spending.
Traditional safety nets are being exhausted. Gold jewelry – often a family’s last financial reserve – gets sold to pay electricity bills or medical expenses. “I never imagined I’d have to sell my wedding set,” confesses a mother in Faisalabad, “but when my son needed surgery, there was no other way.” The social stigma around borrowing from relatives has disappeared as financial distress becomes nearly universal. “I ask my brother one month, my cousin the next,” admits a schoolteacher in Hyderabad. “It’s humiliating, but survival leaves no room for pride.”
Nutritional standards have declined alarmingly across income levels. Milk gets diluted with water to stretch supplies; eggs replace meat as the primary protein source; tea substitutes for milk in children’s diets. Preventive healthcare becomes unaffordable, with families waiting until conditions become emergencies. Education budgets get slashed to the bone – no new uniforms, reused textbooks, and children walking longer distances to avoid transportation costs.
These coping mechanisms reveal both remarkable resilience and a disturbing new normal where families are not just cutting back on luxuries but eliminating what were once considered basic necessities. The psychological toll is immense – the constant stress of financial insecurity, the shame of being unable to provide, the anxiety about an even more constrained future.
Perhaps most worryingly, these aren’t temporary adjustments but likely permanent changes in consumption patterns and lifestyle expectations. Once children leave private schools, they rarely return. Once families eliminate certain foods from their diets, they seldom reintroduce them. The cumulative effect is a gradual but steady decline in living standards that statistics capture poorly but that reshapes society profoundly.
Why Affordability in Pakistan Is Crumbling?
Pakistan’s affordability crisis stems from deep structural flaws in the economic system that go far beyond temporary inflationary pressures. At its core is a decade-long disconnect between wage growth and productivity gains that has left workers increasingly unable to afford basic necessities.
The manufacturing sector’s decline has eliminated traditional pathways to stable employment. Textile factories in Faisalabad and garment workshops in Karachi that once provided living wages now offer precarious work at best. Small-scale industries that drove local economies are collapsing under energy costs and import competition. The result is a labor market where even skilled workers struggle to earn enough to cover basic needs.
Pakistan’s tax system exacerbates these problems by placing disproportionate burdens on those least able to pay. Indirect taxes on essentials like fuel and electricity hit low-income households hardest, while the wealthy benefit from loopholes and exemptions. Regressive subsidies, like those on agricultural inputs, primarily benefit large landowners rather than small farmers or consumers.
Currency devaluation, while intended to boost exports, has made imports prohibitively expensive across the board. For an economy still dependent on imported fuel, medicine, and machinery, this has created inflationary spirals that wages cannot match. The result is a system that protects capital while squeezing labor, ensuring worsening inequality.
These structural issues require fundamental policy changes – from tax reform to industrial policy to social protection systems – that go far beyond temporary relief measures. Without such comprehensive reforms, Pakistan’s affordability crisis will continue deepening regardless of what happens to headline inflation numbers.
Pakistan must fundamentally redefine how it measures economic success. The current focus on macroeconomic indicators like inflation and GDP growth tells only part of the story – and often the least important part for ordinary citizens.
We need new metrics that answer basic questions: Can a teacher pay rent without borrowing? Can a factory worker feed his family and send his children to school? Can a retiree afford medicine without selling possessions? Until our economic measurements can answer these questions affirmatively for most Pakistanis, no amount of statistical improvement will constitute genuine recovery.
Affordability must become the central focus of economic policy, not a peripheral concern. This requires moving beyond the illusion that macroeconomic stabilization automatically translates into improved living standards. Real progress will be achieved not when inflation reaches some arbitrary target, but when ordinary Pakistanis can once again afford life’s necessities with dignity and security.
The choices Pakistan makes in the coming years will determine whether it becomes a society of shared prosperity or one of permanent insecurity. The time for cosmetic fixes has passed – only fundamental reforms that put affordability at the center of economic policy can address the crisis facing millions of households across the nation.
Khurram Niaz