In January 2025, Pakistan’s consumer inflation rate fell to a nine-year low of 2.4% year-on-year. However, many middle-income earners, like Karachi-based TV producer Benish Abbas, continue to struggle due to stagnant wages. Abbas, who hasn’t received a salary increase in three years, faces rising living costs, including higher rent, school fees, and utility bills. Despite multiple fuel price reductions in 2024 and 2025, transportation costs remain unchanged, offering little relief.
The State Bank of Pakistan has responded by cutting its benchmark interest rate by 100 basis points to 12% last month, following a series of reductions totaling 1,000 basis points over the past eight months. While these measures aim to stimulate economic growth, core inflation remains persistently high, and without corresponding wage growth, the middle class continues to feel the financial squeeze.
