Leading Issues in the Economy of Pakistan: Agenda for Reforms The positive development is the high double-digit growth in government investment through the PSDP. The big increase is especially in development spending by the provincial governments in the presence of a rapid growth in revenue transfers from the federal government. Table 3.4: Level of Fixed Investment and Savings Overall, the level of investment and 2020-21 and 2021-22 (% of GDP) savings remain low in Pakistan, as 2020-21 2021-22 shown in Table 3.4. The fixed investment Total Fixed Investment 12.9 13.4 level stands at 13.4 percent of the GDP in 2021-22. For a sustained 5.5 to 6 percent growth rate, the level of fixed investment will have to rise to between Public Private National Savings 3.0 3.4 10.0 10.0 14.1 11.1 16 percent and 18 percent of the GDP. Source: PES 3.4 Inflation Pakistan today is in the grip of high double-digit inflation. The increase in the CPI on a year­to-year basis reached a peak of 21.3 percent in June 2022. There have been only two times in history when such high rates of inflation were approached. The first time this happened was in the years 1973-74 and 1974-75 in the aftermath of a large devaluation of the rupee by 134 percent. More recently, the year, 2008-09, saw inflation at over 17 percent due to the big rise in Table 3.5: Monthly Rate of Inflation in 2021-22 (Year-to-year) (%) international commodity prices, especially of oil. 2021-22 Food Prices Non-Food Prices Overall CPI The monthly inflation rates are presented in Table 3.5. June July August 10.6 9.3 9.7 8.1 8.6 8.4 9.5 8.2 8.4 The overall rate of inflation has September 9.8 8.3 9.0 risen rapidly from November 2021 October 8.1 9.8 9.2 onwards and the acceleration was November 9.9 12.5 11.5 the highest in the month of June when it rose to 21.3 percent from December 10.1 13.8 12.3 13.8 percent in May. January 13.2 12.4 13.0 February 14.4 11.3 12.2 Food prices have risen at a faster rate, reaching 25.8 percent by June. Domestic supply shortages have contributed to very high rates of increase in prices of wheat, March April May June 15.1 11.7 12.7 16.9 11.8 13.4 17.6 12.0 13.8 25.8 19.2 21.3 vegetables, fruits, meat, and Source: PBS 42