There was a time, not that long ago, when Rs 5,000 felt like real money. It could cover a week’s groceries, a family outing, fuel for several days, and still leave something behind. Today, Rs 5,000 disappears before you even realise where it went. You walk into a supermarket, pick up milk, bread, cooking oil, vegetables, and maybe a small pack of chicken, swipe your card, and walk out lighter by five thousand rupees – with barely two bags in your hands.
This is not perception. This is arithmetic.
Official inflation in Pakistan today may sit in the low single digits on an annual basis, far below the double?digit readings seen during the worst years of the pandemic?era inflation surge. But this headline figure conceals a deeper truth: for everyday essentials that occupy most of a household’s budget, prices have climbed sharply and remain stubbornly high relative to incomes.
Take milk. Market surveys show milk prices routinely near Rs 240-250 per litre across most cities. That means a family consuming two litres daily now spends about Rs 14,000-15,000 per month on milk alone – more than what many middle?income households spent on all food combined just a few years ago.
Eggs and chicken tell the same story. Eggs that cost around Rs 150-180 per dozen before 2020 now frequently sell for Rs 350-380 per dozen. Chicken meat, once one of the most affordable protein sources, often ranges from Rs 400 to Rs 680 per kg or even more in many markets. Meat, dairy and eggs, items that historically gave poor and middle?income households nutritional leverage, have pushed many families over a psychological spending threshold.
Bread and flour have followed a similar trajectory. A 20?kg bag of wheat flour that once cost under Rs 1,000 now sells at Rs 2,600-3,000 in many cities. Flour is the backbone of Pakistani diets – if its price jumps, the entire household budget feels the pressure.
Pakistanis are resilient. They have endured cycles of economic stress before. But continuous erosion of purchasing power without corresponding growth in real incomes – particularly for the middle and lower income segments – risks deepening inequality, social frustration, and economic stagnation.
Vegetables and fruits, notoriously volatile in price, have also climbed. Tomatoes hover near Rs 100 per kg, onions around Rs 90-120 per kg, and potatoes about Rs 50 per kg, often higher in lean supply months. Even staples like pulses, rice and cooking oil, which historically provided affordable calories, are shifted upward by global commodity pressures and exchange rate pass?through.
Transport costs add another layer. Petrol prices frequently hover around Rs 250-265 per litre. For a daily commuter, this means monthly fuel bills that can easily cross Rs 10,000-15,000, especially if multiple family members travel to work or school.
Housing tells an even harsher story. In major cities, modest rents that once hovered near Rs 30,000 per month for a basic two?bedroom portion now regularly exceed Rs 45,000-55,000, with utilities, maintenance and rising electricity and gas charges adding further strain. Utilities have remained costly even as headline inflation eased, because electricity, gas and transport costs are priced largely through system charges and import?linked fuels.
Now look at salaries.
The uncomfortable truth is that incomes have not kept pace with this cost explosion. A professional earning around Rs 80,000 per month in 2018 might be making Rs 130,000-150,000 today, nominally higher. But in real terms, adjusted for how much everyday goods now cost, that salary buys much less than before.
Consider the arithmetic. If milk and eggs alone now consume Rs 30,000-40,000 of a family’s budget, rent takes another Rs 45,000-55,000, petrol adds Rs 10,000-15,000, and utilities plus education costs absorb another large chunk, there is very little left for healthcare, savings or emergencies. If you once managed these items on Rs 80,000 in 2018, you now struggle even on Rs 150,000?plus.
Pakistan’s headline inflation has moderated from the extreme spikes of 2023 and early 2024 to single digits by late 2025, largely due to stabilising macro policy and statistical effects. But for items that matter most to households – food, fuel and rent – prices remain high relative to incomes. This is why people feel poorer, even when official numbers say inflation is under control.
This is why you hear people say: Rs 5,000 now feels like Rs 500.
It’s not just a meme. It’s the lived experience of millions.
The erosion of purchasing power has broader consequences. People are cutting back on discretionary spending, deferring medical check?ups, postponing big purchases, and increasingly relying on borrowing to fill gaps in monthly cash flow. Savings rates are falling, and debt – often informal and high?interest – is rising.
This dynamic squeezes domestic demand. Small shops report fewer customers. Restaurants see thinner crowds. Tailors, barbers, electricians and roadside services complain of slowing business. Sensitive price indicators continue to show pressure in food and energy categories, reinforcing this street?level slowdown.
Education, long viewed as a ladder to a better future, is now a luxury for many. Annual school fees rise every year, often above inflation itself. University education is increasingly financed through credit, or young people drop out altogether because families simply cannot afford another tuition bill on top of rising rents and food costs.
The psychological toll is real. When people lose faith in the value of money, they lose faith in the future. Long?term planning shrinks. Home ownership becomes a distant dream. Emergency savings disappear. People shift to survival mode: pay today’s bills first, worry about tomorrow later.
This widening gap between living costs and incomes is driven by a mix of exchange?rate volatility, persistently high energy prices, heavy reliance on indirect taxation, and a slow?growing formal economy that limits job creation and wage growth. Imported fuels and raw materials become expensive when the rupee weakens, electricity and gas costs feed directly into production and transport prices, and consumption taxes take a larger share of household budgets. Meanwhile, productivity growth remains weak.
The result is an economy where effort is stretched thinner, not rewarded, and where employment no longer guarantees economic security.
There are no easy fixes. Policymakers face difficult trade?offs between stabilisation and growth. But one thing is already clear: when ordinary people internalise the sense that Rs 5,000 is the new Rs 500, it reflects not just price movements but a deeper disconnect between macro numbers and daily life.
This phenomenon affects consumption, savings, investment decisions, household wellbeing, and the very social contract between state and citizen.
Pakistanis are resilient. They have endured cycles of economic stress before. But continuous erosion of purchasing power without corresponding growth in real incomes – particularly for the middle and lower income segments – risks deepening inequality, social frustration, and economic stagnation.
For now, households continue to adjust – juggling budgets, scrambling for deals, and making do with less. But resilience has limits.
You can only shrink lives so much before something finally gives.
And in that arithmetic lies the story not just of inflation, but of a society grappling with the everyday reality that Rs 5,000 today buys what Rs 500 used to – and nothing more.
The writer is a financial expert and can be reached at jawadsaleem.1982@ gmail.com. He tweets @JawadSaleem1982