Pricing Pressures

The daily struggles for our citizens are set to intensify as a result of the incoming rise in fuel prices in Pakistan. This is the last thing we need at this time, but as consumers brace for a substantial uptick in costs, it is crucial to understand the un­derlying factors that have made this increase almost inevitable.

The recent escalation of tensions in the Middle East, particularly Iran’s drone strikes in Israel, has caused a ripple effect across global markets, pushing up raw prices, including those of petrol and HSD. If Israel decides to take things further, oil prices could reach close to $100 dollars a barrel internationally. This is not to say, however, that this is simply a matter of unfortunate circumstances.

For some time, Pakistan has been sustaining artificially low fuel prices through subsidies, offering some semblance of relief. Al­though it may have given respite to many, especially during the PTI period, these artificially lowered prices have misled the pub­lic into thinking that we were following global market rates. When prices finally do coincide with rising market rates, it will obvi­ously come as a surprise for many. As part of its commitment to the IMF, Pakistan must now gradually phase out these subsidies to increase revenues and align with international economic stan­dards for the sake of our fiscal health. Pakistan is already halfway through its fiscal year and has collected a significant portion of the targeted petroleum levy; we cannot afford to let this progress go to waste. The combination of global dynamics and some of our past mistakes have made this uptick unavoidable, but it will be a crucial step toward long-term economic stability. Being cogni­zant of these challenges, the state must prioritise protecting con­sumers from exploitation by unscrupulous actors seeking to prof­it from this situation. Unfair pricing of essential commodities like fuel only exacerbates the burden on ordinary Pakistanis already grappling with rising inflation.

This is the only thing our government can do in this moment to pro­vide some level of relief while its hands are tied by economic impera­tives. Without a doubt, this hike will have the most impact on the most vulnerable members of our society, and the state must ensure that no one can take advantage of them as we try to weather this storm.

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