Impact of Food Inflation on Pakistan's Nutritional Security

Inflation, defined as a sustained increase in the general price level, has become one of the most pressing socioeconomic challenges in Pakistan. The country has experienced persistent double-digit inflation, with food inflation consistently outpacing the general Consumer Price Index (CPI). In the fiscal year 2022-23, average national CPI inflation reached 29.2%, while food inflation soared to a staggering 38.5% (Pakistan Economic Survey, 2022-23). This dramatic surge severely strains household budgets, particularly for the 37.2% of Pakistanis living in multidimensional poverty (UNDP, 2023), who spend over 50% of their income on food (World Bank, 2022). Food affordability, a core dimension of food security, reflects the economic capacity to access sufficient, safe, and nutritious food without compromising other essential needs (FAO, 2022). In Pakistan, this capacity is under severe threat.

A robust body of literature demonstrates that food price inflation in Pakistan is not a monolithic phenomenon but is driven by a complex interplay of structural and cyclical factors. These include pass-through effects from a depreciating rupee which lost over 50% of its value against the USD between 2021 and 2023 (State Bank of Pakistan, 2023) imported commodity price shocks, and domestic supply chain disruptions often linked to climate extremes, such as the catastrophic 2022 floods that caused over $30 billion in damages (World Bank, 2022). Research confirms that such inflation directly increases poverty headcounts and exacerbates malnutrition, especially in the absence of robust, scaled social safety nets like the Benazir Income Support Program (BISP) (Headey & Alderman, 2019; Jan et al., 2022).

At the micro level, inflationary shocks force detrimental dietary substitutions. Households shift from nutrient-dense foods like fruits, vegetables, meat, and dairy to cheaper, energy-dense staples like wheat and rice, leading to increased risks of micronutrient deficiencies. Pakistan already bears a significant malnutrition burden, with 40.2% of children under five stunted and 17.7% wasted (National Nutrition Survey, 2018). Inflationary periods risk reversing any progress made on these indicators (Ruel et al., 2010). Furthermore, evidence underscores that women, children, daily wage workers, and smallholder farmers suffer disproportionate welfare losses, exacerbating pre-existing gender and economic inequalities (Alem & Söderbom, 2012; Cheema et al., 2023).

Despite the acute relevance, critical gaps persist in Pakistan-specific research, particularly in understanding long-term household coping mechanisms, the cost-effectiveness of different policy interventions (subsidies vs. cash transfers), and the integration of nutritional outcomes into macroeconomic stabilization models. This review systematically maps the current evidence to inform more effective, context-sensitive policy responses aimed at safeguarding food affordability for Pakistan's most vulnerable populations.

Macroeconomic Drivers of Food Inflation and National Food Security in Pakistan

Rising inflation poses a systemic threat to Pakistan’s national food security by weakening domestic production incentives, increasing import dependence, and placing sustained pressure on foreign exchange reserves and public finances. As food prices rise, the government is compelled to divert scarce fiscal resources toward subsidies and emergency imports, reducing its capacity to invest in long-term agricultural productivity, climate adaptation, and rural infrastructure. This macroeconomic squeeze undermines the stability and resilience of the national food system.

A major driver of food inflation in Pakistan is exchanging rate volatility coupled with heavy reliance on imported food commodities and agricultural inputs. Pakistan remains a net importer of essential food items such as palm oil, pulses, and wheat, as well as fertilizers, pesticides, and energy inputs. The sharp depreciation of the Pakistani Rupee has a rapid pass-through effect on domestic food prices. Empirical evidence shows that exchange rate movements explain a substantial share of food price variation, with estimates suggesting that over 30 percent of domestic food inflation can be attributed to currency depreciation (Akram & Qayyum, 2018). This impact is further amplified by Pakistan’s dependence on imported fuel and electricity, which raises production, processing, and transportation costs throughout the food supply chain (Khan & Ahmed, 2021).

Monetary and fiscal policy dynamics also shape food security outcomes. Expansionary fiscal measures, frequently financed through central bank borrowing, have contributed to demand-side inflationary pressures. In response, the State Bank of Pakistan has pursued aggressive monetary tightening, raising the policy rate to historically high levels. While such measures aim to stabilize prices, they also increase borrowing costs for farmers, traders, and agro-processors, potentially constraining food supply growth and investment (State Bank of Pakistan, 2023).

Climate-induced supply shocks further intensify inflationary pressures. Extreme events such as the 2022 floods, which inundated large agricultural areas, disrupt production and logistics, creating sudden shortages and price spikes. Combined with structural weaknesses in market integration, information gaps, and occasional hoarding by intermediaries, these forces reinforce price volatility and erode national food security (Ali & Erenstein, 2017; FAO, 2023; Hussain, 2020).

Inflation, Welfare Losses, and Nutrition Stress at the Household Level in Pakistan

At the household and individual level, inflation in Pakistan operates as a deeply regressive shock that disproportionately harms the poor and vulnerable, magnifying existing socio-economic inequalities. Low-income households allocate an exceptionally high share of their income often between 60 and 70 percent to food expenditures. As food prices rise, these households experience sharp declines in real purchasing power, leaving little scope for adjustment without sacrificing essential consumption. Empirical simulations indicate that the food price surges observed between 2020 and 2022 pushed approximately five million additional individuals below the national poverty line, underscoring the direct link between inflation and poverty expansion (Jan et al., 2022). National household survey data further confirm a broad-based erosion of real incomes, with the steepest losses concentrated in the lowest income quintile (Pakistan Bureau of Statistics, 2023).

Beyond income effects, inflation severely compromises diet quality and nutritional outcomes. As food becomes more expensive, households adopt coping strategies that prioritize caloric sufficiency over dietary diversity. Expenditure on relatively costly but nutritionally essential items such as meat, pulses, dairy products, fruits, and vegetables are reduced first. Evidence from urban Punjab shows that a 10 percent increase in food prices results in a measurable decline in dietary diversity, particularly through reduced consumption of animal-source foods and micronutrient-rich produce (Noreen & Sheikh, 2023). These adjustments contribute to widespread “hidden hunger,” characterized by deficiencies in iron, zinc, and vitamins, with particularly damaging consequences for child growth, cognitive development, and long-term human capital formation.

Inflation also deepens structural inequalities and gender disparities. Informal workers, landless laborers, and female-headed households possess limited assets and weak social protection, restricting their ability to absorb price shocks. Within households, women frequently reduce their own food intake to protect children and male earners, intensifying risks of maternal anemia and poor health outcomes (Cheema et al., 2023). Smallholder farmers, many of whom are net food buyers, often fail to benefit from higher output prices because rising input costs outpace gains, leaving rural poverty and food insecurity entrenched (Hussain & Thapa, 2022).

Advancing Evidence for Inflation-Resilient Food Security in Pakistan

Despite a growing body of literature on food inflation and welfare impacts, significant research gaps continue to limit Pakistan’s ability to design effective, evidence-based responses. One of the most pressing needs is the development of nationally representative longitudinal household panel data. Existing surveys are largely cross-sectional and infrequent, which prevents systematic tracking of how the same households adjust consumption, labor supply, asset sales, and health-seeking behavior across successive inflationary episodes. High-frequency panel data linking food prices with nutrition, morbidity, and education outcomes would allow policymakers to distinguish between short-term coping strategies and long-term welfare losses, particularly among chronically poor households.

A second priority lies in evaluating the effectiveness and targeting efficiency of existing policy interventions. Major programs such as the Benazir Income Support Program (BISP), Utility Stores Corporation subsidies, and ad hoc relief packages are widely implemented, yet rigorous impact evaluations remain limited. Comparative research is needed to assess whether targeted cash transfers, price subsidies, or hybrid approaches provide greater protection against food insecurity during inflationary shocks, while minimizing fiscal leakages and market distortions.

Third, Pakistan lacks integrated agri-food system models that connect macroeconomic dynamics with agricultural production and nutritional outcomes. Current analyses tend to be siloed, examining exchange rates, interest rates, climate shocks, or nutrition in isolation. There is a strong need for interdisciplinary modeling frameworks that link monetary policy, trade exposure, input markets, yield variability, and dietary indicators to capture the full transmission of inflation across the food system.

Finally, the climate–food–inflation nexus remains underexplored. As climate-induced production volatility intensifies, research must examine how climate shocks interact with storage capacity, trade policies, and social protection mechanisms to either amplify or dampen food inflation. Addressing these gaps is essential for building resilient, nutrition-sensitive food systems in Pakistan.

Conclusion

This systematic review demonstrates that inflation in Pakistan is not merely a macroeconomic imbalance but a profound threat to food affordability, nutritional security, and social equity. Persistently high food inflation driven by exchange rate depreciation, import dependence, climate-induced supply shocks, and structural market weaknesses has eroded household purchasing power and intensified national food insecurity. The evidence reviewed clearly shows that food inflation disproportionately harms low-income households, women, children, informal workers, and smallholder farmers, reinforcing existing poverty and gender inequalities. At the household level, inflation compels nutritionally damaging coping strategies, including reduced dietary diversity and substitution toward calorie-dense but nutrient-poor foods, thereby exacerbating Pakistan’s already severe burden of malnutrition and undermining long-term human capital formation.

At the national level, inflation constrains fiscal space, increases import reliance, and weakens the state’s capacity to invest in sustainable agricultural growth and climate resilience. While short-term monetary tightening and ad hoc subsidies may provide temporary relief, they are insufficient to address the structural roots of food price instability. The review highlights critical research gaps particularly the absence of longitudinal household data, limited evaluation of social protection effectiveness, weak integration of nutrition into macroeconomic models, and inadequate understanding of the climate–food–inflation nexus.

Addressing food affordability in Pakistan requires a coordinated policy approach that aligns macroeconomic stabilization with climate-resilient agriculture, well-targeted social protection, and nutrition-sensitive interventions. Strengthening the evidence base is essential for designing policies that protect vulnerable populations while ensuring long-term food system resilience in an increasingly volatile economic and climatic environment.

References: Akram & Qayyum; Ali & Erenstein; Cheema et al; FAO; IFAD; UNICEF; WFP; WHO; Government of Pakistan; Headey & Alderman; Hussain; Hussain & Thapa; Jan et al; Khan & Ahmed; Noreen & Sheikh; Ruel et al; State Bank of Pakistan; UNDP; World Bank.

Please note that the views expressed in this article are of the author and do not necessarily reflect the views or policies of any organization.

The writer is affiliated with the Institute of Agricultural and Resource Economics, University of Agriculture, Faisalabad. Pakistan and can be reached at Aleenanaseer549@gmail.com

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