Report presents the first comprehensive study to measure spatial differences in living costs across 25 major urban centers in Pakistan relative to the national average. Utilizing retail price data for 274 commodities and services alongside household expenditure patterns, the report reveals a significant 15% disparity in living costs between the country’s most expensive city, Karachi, and its cheapest, Jhang. Econometric analysis demonstrates that the cost of living does not follow a simple linear relationship with city size; instead, it is driven by intra-urban factors where medium-sized cities (populations between 2 to 6 million) benefit from agglomeration efficiencies that keep costs low, while larger metropolises and capital cities face upward pressure from congestion and high land values. Ultimately, the study concludes that failing to account for these geographic price differentials leads to severe biases in regional poverty estimates and misalignments in public and private sector wage policies.
