Economy of the Pakistan is suffering a lot since few years and facing the different challenges. In past few years it has undergone significant changes. The biggest worry of the all that is a core problem is inflationary spiral. Government should be in search of finding its root cause and the determinants of inflation. There are a lot of reasons that are contributing towards the rise in the rate of inflation. First of all, inflation can occur when the government prints a greater amount of money to have control over the crisis going on in the country. When excess of money is created; it gives rise to the procuring power of some societal groups. Secondly, inflation takes place when the cost of production increases. Even a small rise in the production cost directs to an increase in the price of finishing manufactured goods. Inflation can also be based on the federal taxes that are applied on consumer products. As the rate of tax increases, sellers often transfer the load on to the consumer. The catch, on the other hand, is that if the price of products increases, they hardly come back to normal. More common factors that are leading our country towards inflation are; less job opportunities, loans from "IMF" and World Bank, destruction wrought by floods - loss of crops and animals etc - and loadshedding. Because of all the issues mentioned above, the industries fail to fulfill the demands of individuals which are directly affecting the economy of Pakistan. That is why prices are continuously increasing. So, to make the present conditions better; our government should take an initiative for the betterment of economy. Firstly they have to control the scourge of loadshedding by making dams including Kalabagh dam. By doing so, the total productivity of industries will boost. Then, our politicians ought to reduce their wasteful expenditure and must protect middles classes from extreme taxation like RGST. Even this little contribution by our government can work wonders for the country. Only then can we hope to become a developed one. Pakistan's government is not giving heed to the people' problems due to political complication inside and outside the parliament.