Importantly, inflation is a tax that erodes the purchasing power of the currency. Thus, the poor, who hold much of their assets in cash, bear this tax disproportionately, while the rich can partly evade it by holding assets that are return-bearing (like bonds), increasing in value (like land), or in a stable foreign currency (like the dollar).
Then, by raising uncertainty about the future, inflation discourages investment in projects that raise the economy’s productive capacity. Businesses start focusing on projects with short-term returns, or transactions in foreign currency.
Insofar as inflation erodes trust in the national currency as a store of value, it also erodes the associated national pride, and this is felt by all citizens. In Pakistan, this erosion has been significant: by the mid-1970s, the Pakistani rupee had lost half of the purchasing power it had in 1956; and by the early 1990s, it had lost 90pc. Large as it seems, it is a much less dramatic decline than witnessed by Turkey, Egypt and Morocco. And a comparison starting in 1980, and excluding rich countries, suggests Pakistan has done no worse than its South Asian neighbours.