Claim: Pakistan is the fourth most expensive country in the world according to a report by The Economist magazine.
Fact: Pakistan is not the fourth most expensive country in the world, nor has The Economist reported that.
The Economist is a highly reputed weekly magazine that publishes economic and political news for a global audience. The Economist regularly provides economic and financial data (GDP Growth, Inflation Rate, Unemployment Rate etc.) for a list of 42 countries plus the European Union. According to several recent issues of The Economist, Pakistan is experiencing the fourth highest increase in consumer prices on an annualized basis, amongst the countries on that list. In the 16 October 2021 issue of The Economist, increase in consumer prices for September 2021 was reported as 9% (on an annualized basis). It is important to note that increase in consumer prices is one of several measures of inflation but not the only relevant measure.
That said, consumer price changes, or rates of inflation, do not measure whether a country is more expensive or less expensive than another. A ranking of most expensive countries may instead be found in cost of living indices such as The Economist Intelligence Unit’s Worldwide Cost of Living survey. These indices measure the price of a basket of essential goods either on a dollar basis or adjusted for the average income in a given country (purchasing power parity adjusted). A list of countries with high costs of living may have little overlap with a list of countries with high inflation rates. Wealthy countries usually have a higher cost of living in dollar terms than poorer countries, while the latter may have higher rates of inflation. This is because poorer countries have a lower cost of living and small changes in absolute terms will appear larger in percentage terms. Wealthier countries, on the other hand, have already experienced large increases in costs of living over an extended historical period.
This nuance is illustrated by Pakistan’s ranking on cost of living indices. For instance, this index by Mercer ranks Islamabad and Karachi as the 199th and 201st most expensive countries respectively, from a list of 209 cities. In a similar vein, according to numbeo.com, the minimum amount of money required for food per person per month (assuming 31 days per month) in Pakistan is 90.86 USD as compared to 699 USD in Switzerland for a similar list of food items.
Despite the important distinctions between inflation rates and cost of living, many leading news outlets in Pakistan have reported that Pakistan is the fourth most expensive country in the world, alluding to the figures released by The Economist. In fact, from 20 to 26 October, more than 50 news outlets published erroneous reports regarding this subject on social and digital media, such as here, here, here, here, here, here, and here, among others. Interestingly, the majority of these reports, while generally citing The Economist, did not refer to a specific article, issue, or dataset.
Conclusion: Claims made by major Pakistani news organizations that The Economist has ranked Pakistan the fourth most expensive country are false and based on a misunderstanding of the difference between inflation rates and cost of living. While Pakistan is experiencing higher inflation rates relative to other countries, it does not rank in the top 100 countries based on major cost of living indices, with base consumer prices lower than those in most other countries.