LAHORE: Most of his friends were astonished when Yawar Khan (real name being withheld on request), an accounts officer working with a semi-autonomous government agency, asked them to find him a part-time evening job. “Why are you looking for a second job? You’re already getting a handsome salary with health cover and other fringe benefits,” they asked.

“The kind of salary I get isn’t sufficient for a decent living,” answered the 50-year old Yawar Khan, who is drawing Rs20,000 a month. The father of two college-going daughters and a school-going son, Mr Khan did not find a second job. He was forced to find a way to adjust his lifestyle to the new realities.

His wife cut back on her kitchen budget. Now they have meat (beef or chicken because they just cannot afford mutton anymore) only twice a month or when someone is visiting them. Milk and milk products and fresh fruit rarely find their way into his home. The family is also saving on a number of other items like clothing, utilities and transport. Now they attend fewer family gatherings and don’t encourage guests. Their son has already been shifted to a relatively inexpensive school, which the parents firmly believe amounts to compromising on the quality of their son’s education and future.

Theirs is the response of a typical middle class family, unable to increase its income to meet the mounting inflation: it can only curtail its needs and exchange a good quality of life for poorer living.

Mr Khan’s family represents an impoverishing middle class, which is fast slipping into the realm of poverty in spite of what Prime Minister Shaukat Aziz describes as “historic” GDP growth and economic expansion.

“Normally his (prime minister’s) entire talk is only about expanding numbers. He never talks about what it really takes to live your life,” Mr Khan says. “Neither GDP growth nor foreign exchange reserves mean anything to me if they don’t help me improve the quality of my life. I don’t care if the GDP grows by 10 per cent or doesn’t grow at all if my children cannot get a decent education and live a reasonably comfortable life.”

While people like Yawar Khan still have some “cushion” and can adjust at the expense of the quality of their life, other middle class people on lower wages have to find additional means to augment their income either by finding part-time jobs or starting some small businesses.

“In the evening I work as cashier for six hours at a cafe,” says a clerk at the Punjab Civil Secretariat. Another clerk has set up a small cigarette stall in his neighbourhood. “After returning from school, my elder son opens the stall in the afternoon. I go there at 6pm and sit there till as late as 11pm while my son goes for private tuition,” he says.

Moonlighting is quite common among both government and private employees and is considered as the only way of increasing one’s income. Private employers who are aware of this often tend to ignore it.

While most people would argue that inflation has never been absent from their lives, it returned “officially” only a few months back when the central bank began tightening its monetary policy and raised interest rates. The people have been grappling with what some economists call “hidden” inflation of prices ever since the government began implementing its economic reforms programme for stabilizing macroeconomic indicators, but the government began to admit inflationary trends in the economy only less than a year back. The central bank blamed increasing international oil prices and higher wheat/flour rates for the inflation. The prime minister says when an economy heats up due to fast growth it is natural for inflationary trends to emerge.

Financial experts and economists insist that a major chunk of both the urban and rural populations, especially the middle classes, have taken a serious hit because of the inflation. But State Bank Governor Dr Ishrat Husain told reporters here last month that inflation had affected only 10 per cent or less of the country’s population. “Only the fixed income and salaried people like teachers and journalists, who shouldn’t be more than 10 per cent of the population, have taken the hit. Even the rural population hasn’t been affected by the inflation because extremely good cotton and wheat yields this year will pump Rs50 billion into the rural economy,” he was quoted as having said.

Prime Minister Shaukat Aziz, who claims that the recent economic expansion has created a “new, more affluent middle class” in the country, also supports the governor. He has for several months been harping on the theme that the growth in the sale of cars, motorcycles, home appliances and consumer durables shows that both the urban middle class and small farmers have prospered in the last few years.

Many economists and financial experts do not buy the official argument. “The prosperity to which the prime minister refers to is not because incomes of the middle class or the small/medium farmers have gone up. This prosperity is not real,” says a chartered accountant.

“Such people were able to buy new cars, motorcycles, fridges, air-conditioners, etc., because of the new phenomenon of consumer financing that was set off by a loose monetary policy and low interest rates. I’m worried as to what is going to happen when interest rates go further up. How will these people be able to pay their household debts? It is going to be a crisis-like situation.”

One economist says it is incorrect to assume that inflation hasn’t affected the small/medium farmers due to the flow of huge additional money into the rural economy. “If we agree with this, it would mean that wealth is distributed in the rural areas fairly and equitably. It is not. Most of those living below the poverty line reside in the rural areas. They don’t own land or livestock or any other means or source that may generate income for them and their families. They are the people whose life becomes more miserable even with a slight dose of inflation and their lot remains unchanged even if billions of rupees get pumped into the rural economy.”

Inflation comes in different forms. The recent bout is reflected more starkly in the prices of transportation and food whose prices have already hit the roof. Though the cost of other items has also gone up, the rise is not as steep as in the case of food and transport.