Central bank says income inequality and regional disparities increased despite rise in household earnings
Pakistan’s socio-economic disparities widened across income groups and regions over the past six years despite increases in nominal household incomes and improvements in some demographic indicators, the State Bank of Pakistan (SBP) said in its latest report.
The central bank said average household incomes increased between fiscal years 2019 and 2025, while household sizes declined modestly and employment patterns gradually shifted toward salaried work.
According to the report, the share of salaried employees rose during the period, while the proportion of contributing family workers declined, reflecting movement toward a more monetized labour market.
However, the SBP said the gains were unevenly distributed, with the income gap between rural and urban households widening significantly.
The report noted that household consumption patterns pointed to declining welfare among lower-income groups, as rising housing and utility costs forced many families to reduce spending on education.
“Households reduced expenditure on education, which is essential for human capital development,” the SBP said.
The central bank added that although the share of food expenditure declined slightly, consumption of key staples and nutrients also decreased, indicating growing financial pressures on households.
According to the report, the average number of earners per household declined during the review period, weakening families’ income-generating capacity.
At the same time, the contribution of non-labour income — including remittances and transfers — increased. The SBP warned that reliance on such income sources could heighten vulnerability to domestic and external economic shocks.
The report showed that income and expenditure growth was substantially stronger among wealthier households.
The top income quintile recorded an absolute increase of 119% in income and spending, compared with an 80% increase among households in the bottom income quintile.
“As a result, the gap between rich and poor households widened,” the report said.
The SBP also highlighted growing disparities in social indicators across provinces and regions, particularly literacy rates and the number of out-of-school children, reflecting unequal access to opportunities and public services.
Economists say persistent inequality and weak human capital development remain major challenges for Pakistan’s long-term economic stability and inclusive growth.
