In a big blow to the pockets of Pakistani citizens, the caretaker government announced a staggering increase in fuel prices on Wednesday. The price of petrol surged by Rs13.55 per litre, reaching Rs272.89 per litre, while high-speed diesel (HSD) saw an increase of Rs2.75, reaching Rs278.96 per litre. This spike is sending shockwaves through the economy, as consumers now brace themselves for the impending inflationary storm.
The rationale behind this surge is linked to the surge in international oil prices and import premiums. Despite a stronger rupee against the US dollar, the Pakistan State Oil faced higher import costs, leading to a more substantial increase than initially projected. However, the fuel price hike appears to be just the tip of the iceberg, as the government contemplates another substantial increase in gas prices, expected to average up to 41% by mid-February. This move is part of the ongoing $3 billion loan programme with IMF, aimed at curbing the escalating circular debt. If implemented, this would mark the second increase in the gas prices since November 2023, placing additional strain. As if this were not enough, there seems to be no respite for consumers facing soaring electricity prices. Nepra is expected to raise power tariffs in the coming months, following formal requests from state-owned Discos to recover a substantial amount of Rs81.5 billion from consumers. This sought recovery, primarily related to adjustments for the second quarter of the fiscal year 2023-24, is a significant burden on consumers already grappling with economic challenges.
The situation is feared to trigger a new wave of inflation, exacerbating the financial hardships faced by the general public. The road ahead appears rocky, and citizens must brace themselves for the storm of inflation that seems inevitable in the near future.
Published in The Express Tribune, February 3rd, 2024.
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