For Razia, domestic help for a middle-income family, making ends meet is a distant dream. Supporting a family of five, including two small grandchildren on a fluctuating income, her financial troubles continue to balloon with the steady rise in cost of even the basic necessities.

“I wanted to educate both my sons, but my finances do not allow me that, so I only send the younger one to school. The elder one is employed full time at a house in Defence,” says Razia, “but despite two incomes, running the house is a challenge, and even living on daal roti can seem impossible at times. Fruit or meat, of course, is no longer an option” — a plight common among many domestic servants.

While the Economic Survey of Pakistan likes to present a positive picture of the country’s economy, ground reality sharply contradicts this view. A recent report by the Planning Commission of Pakistan shows that the annual average cost for bare human survival has shot up from Rs785 to Rs1805 in the past six years, which — according to the UNDP national report for 2012 — is the prime concern for citizens. With the rise in food prices, particularly flour, rice and lentils — a staple food group for many lower income groups — the caloric intake per person has decreased steadily leading to malnutrition, and many a household have cut down their meals to two a day in order to adjust their budgets. Coupled with increasing unemployment, consumers are now forced to make choices as to where to spend their limited earnings.

Food, of course, being the top priority in order to survive, gobbles up a large portion of the income, particularly in the lower and a part of the middle social strata. Vegetable and meat vendors at Karachi’s Empress Market endorse this view and claim that they’ve experienced little or no fall in their sales so far.

“People have to eat, so obviously they have to buy at least the very essentials like onions, tomatoes and potatoes,” explains a vegetable vendor. Asked the reasons behind price hikes, he simply shrugs his shoulders and blames the ‘mandi’ which he feels dictates the price fluctuation. Hence, with a large portion of income set aside for food items, people have to cut back on other expenses such as recreation and healthcare and even education. In this battle for survival, a household with more than one income is no longer a novelty.

“Many low income workers/employees walk to work (occasionally up to even 20 km) instead of taking the bus to save on the fare,” adds economist Dr Kaisr Bengali, “Similarly, women cut back on their own medicines in order to ensure food for the children”. And while a price hike is unwelcome in any circumstances, according to Dr Bengali, for the salaried class, even a nine per cent increase in the prices is unbearable, since they live on fixed income.

“Shopping for apparel, etc. is another casualty,” adds a salesperson in a shopping centre in Karachi, largely patronised by middle-income groups, “While it may seem as if the markets are teeming with consumers, the reality is that few end up spending as much as they did a few years ago. Most of them hunt for sales, and lower-priced items. Business has rarely been this bad,” he laments.

However, a segment of middle class has found an antidote in credit cards. In a household running on Rs35,000 to Rs40,000 monthly income, one has to really stretch the budget in order to cover every expense from school fee to utility bills and other necessities. In such circumstances, consumers either turn to credit cards which give them leverage to not only shop in upmarket superstores and eating out, but to channelise their cash towards addressing core payments that require hard cash such as education, and in some cases healthcare. At the end of the day, they simply pay the markup, and while the principal amount of debt/loans continues to shoot up with rescheduled loan installments, this system has given them a temporary relief.

“Part of the current level of inflation is fuelled by deficit financing due to low tax revenues and high expenditures,” notes Dr Bengali. Contrary to popular belief, he argues that fuel price rise is not a very important contributor to inflation, “thanks to deflationary conditions in Europe and USA”. He believes that the economic situation in the West has depressed Pakistan’s exports and which has contributed to unemployment, and hence the financial crunch.

Critics believe that cost of living will continue to rise; however, one has to find a way around it in order to maintain a decent standard of living. “Rapid industrialisation will begin the process of positive change,” asserts Dr Bengali, “Those who have jobs and a good income can absorb price rises.”