The recently announced federal budget of Rs4.5 trillion has done little to alleviate the economic burdens weighing heavily on middle-class families across Pakistan. Although there have been claims of moderate growth, the truth is that average households have experienced a challenging year due to increased inflation, devalued currency, and higher unemployment rates.
As the cost of living keeps rising, families find it harder to maintain their social status and have fewer choices to preserve their way of life.
Financial Struggles and Rising Inflation:
Families are struggling with stagnant incomes and limited supplementary support due to inflation rates exceeding 30%. Due to the strain on family budgets, many families have downsized to smaller and more affordable housing, enrolled their children in cheaper schools, cut back on healthcare expenses, and sacrificed comforts.
In extreme cases, some families have resorted to selling assets or taking on more debt, exacerbating their financial woes.
Future Outlook and Challenges:
In the coming year, most middle-class households are unlikely to see a significant improvement in their finances. The widening gap between falling real incomes and rising expenses poses a formidable challenge for families, even if the next elected government implements corrective measures to restore business confidence.
Ordinary citizens won’t be able to close the affordability gap with the proposed budget, which targets a 21% inflation rate and a 3% growth rate.
Impact on Basic Necessities:
The soaring costs have already taken a toll on kitchen budgets, with anecdotal evidence pointing to decreased nutrition intake among middle-class children and adults due to affordability concerns. Families are now compelled to carefully ration groceries and feel apprehensive about entertaining guests due to the strain on their resources.
Finance Minister Ishaq Dar attributed the unprecedented price hike to external factors such as global conflicts, commodity market pressures, and currency devaluation.
Challenges in Housing, Transportation, and Education:
Housing rentals continue to rise, making them increasingly unaffordable for families unless income growth outpaces inflation. Many families are considering a return to joint family systems to reduce living costs.
Despite a marginal drop in petroleum prices, public transportation rates are unchanged, and any fluctuations in global oil prices could lead to more hikes. Education and healthcare expenses are also expected to rise, burdening average Pakistani families.
Limited Relief and Public Engagement:
While a small minority of civil servants will benefit from upward salary revisions, the middle class will not experience significant relief. The salary increases, ranging from 30% to 17.5%, only covers government officers in Grades 17 to 22, leaving those in Grades 1-16 with minimal gains. The private sector, which employs a significant portion of the working population, offers limited guarantees of higher wages.
Despite the prevailing distress and frustration, the chances of public resistance to the budget or active engagement in policy debates remain remote. The erosion of public trust caused by political turmoil and violence, coupled with disillusionment from the fallout of the opposition party, has left many disheartened and demoralized.
With hopes resting on the upcoming general elections to inject private investment into the service sector, the middle class eagerly awaits a change in fortunes to improve their economic prospects.
