Impact of inflation on public behavior and social values

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By Nimra Durrani

ISLAMABAD, Aug 18 (APP): Pakistan's economic landscape has been marred by fluctuating inflation rates in recent years, with marked changes between 2018 and 2022. Inflation rates increased from 5.08% in 2018 to a high of 19.87% in 2022. This volatility has significantly affected public behaviour and increased financial insecurity, resulting in compromised quality of life. The economic strain has not only exacerbated financial problems but has also undermined social values ​​and community bonds and weakened traditional support systems and social cohesion.

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Pakistan's recent efforts to combat economic instability, such as improving monetary policy and investing in key sectors, are commendable. But more consistent, long-term measures are needed to achieve lasting stability. Strengthening economic fundamentals, boosting investor confidence and implementing comprehensive reforms are critical to achieving this economic stability.

Inflation in Pakistan is driven by excess money supply resulting from expansionary monetary policy, which pushes up prices when it exceeds the supply of goods and services. Political instability further exacerbates the problem by undermining investor confidence and increasing operating costs for businesses. In addition, fluctuations in the value of the rupee increase uncertainty, as a weaker rupee increases the cost of imports and servicing foreign debt, reducing consumer purchasing power and affecting both imported and domestic goods.

Kanwal Syed, 44, an educationist and mother of three college-bound children, spoke to APP about her struggle with the rising cost of living. She said, “Inflation has drastically changed our daily lives. Due to high fees, we were forced to send our children from a private school to a cheaper school. Eating out or going on family trips is now beyond our budget. We rely on public transport to save on petrol, which affects our quality of life. The ongoing financial stress makes me anxious and overwhelmed. We struggle to maintain our previous lifestyle and this is affecting our mental wellbeing.”

Akhtar Malik, 52, owner of a small business specialising in wedding and event decorations and once considered wealthy, described his difficulties to this writer. He said: “The rising prices are affecting every aspect of my life. I have had to cut back on my personal expenses and spend less on non-essential items. Meeting living expenses is challenging and is taking a toll on my mental health. This financial strain is also affecting my relationship with my spouse. The pressure of living on a tighter budget and not being able to afford simple pleasures is affecting my overall health.”

The psychological impact of inflation is profound. Rising prices and reduced purchasing power lead to increased financial stress and anxiety. Managing a tighter budget is overwhelming, especially for those living paycheck to paycheck. The constant pressure to meet daily needs amid fluctuating prices contributes to significant psychological distress.

Commenting on the current economic volatility and its impact on human health, particularly the lower middle class, clinical psychiatrist Dr. Maryam said, “Economic instability has profound effects on mental health. For the lower middle class, rising costs and reduced financial security increase stress and anxiety. This population often experiences significant psychological distress, including increased rates of anxiety, depression, and other mental health issues. Managing tighter budgets and dealing with financial uncertainty can significantly impact overall mental health. Addressing these challenges is critical, as understanding the link between economic conditions and mental well-being is essential. For example, many of the patients she studies have mental health issues that stem from economic complications.”

She also pointed out that isolated suicides and rising immigration rates are tragic consequences of the economic strain. “This contributes to unpleasant consequences and underscores the urgent need for comprehensive support systems,” she added.

In short, Pakistan's experience with inflation reflects the complex interplay between exchange rate dynamics, production costs, political stability and monetary policy. These factors shape an economic environment in which consumers must cope with rising costs and adjust their spending habits. Understanding the multifaceted nature of inflation and its impact on consumer behavior is critical for both individuals and policymakers. This financial stress underscores the broader impact of inflation on everyday life and requires effective policy responses for ordinary people.

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