New inflation wave to bring more misery for masses

Petrol prices increased by Rs58.43 per litre to highest ever Rs331.38, diesel by Rs55.78 per litre to Rs329.18 per litre in last 30 days n The latest increase in fuel prices most likely to push inflation to near or above 30 percent this month n People selling assets to pay inflated power bills.


ISLAMABAD  -  A new wave of infla­tion is likely to hit peo­ple in the days to come following government’s decision to increase the fuel prices substantial­ly. After increasing the power tariff manifold the federal caretaker government also plans to further enhance the gas prices to fulfill the conditions of the In­ternational Monetary Fund (IMF).

The caretaker gov­ernment in last month massively enhanced the prices of petroleum products due to the currency depreciation and hike in prices in the international mar­ket. Petrol prices have increased by Rs58.43 per litre to highest ever Rs331.38 and diesel prices by Rs55.78 per li­tre to Rs329.18 per litre in the last one month —from August 16 to Sep­tember 16 this year. 

Meanwhile, the gov­ernment has also in­creased the electrici­ty prices in the recent past. Federal govern­ment had recently in­creased the power tariff by Rs 7.5/unit from July 1, 2023. Meanwhile, it would also raise the electricity tariff sepa­rately on a quarterly as well as monthly fuel adjustment basis. The caretaker government on Friday has once again announced an in­crease in gas prices. Un­der the proposed plan for gas tariff rationali­sation, the rates would go up for all consumers. 

Around 60 percent of con­sumers in cities would see a hike of Rs200 to 400 per unit, while rich consumers would pay the maximum price. All these measures would fuel the inflation rate in the country. The in­flation rate has eased to 27 percent in August from 38 percent of May this year. Caretaker Finance Minister Shamshad Akhtar termed the reduction in inflation rate as some sign of eco­nomic recovery. “This is the way forward for gradu­al improvement. There are some signs of economic re­covery, even if just starting”, she said and mentioned the consumer price index (CPI) declining from 38pc in May to 27.3pc last month. The ministry of finance stat­ed that local currency de­preciated in the starting days of September before improvement in its value. Meanwhile, benchmark in­ternational Brent prices went beyond $93 per bar­rel against $88 in the first week of September. “The impact of currency appre­ciation against the US dol­lar will be highlighted next month,” said an official of the ministry of finance. He further said that the gov­ernment had already ful­filled the conditions of the IMF to increase the petro­leum levy to Rs60 per li­ter on petrol. The recent in­crease in oil prices might push the inflation to near or above 30 percent in the current month. Transports have already announced an increase in the fare of pub­lic transport, which would ultimately enhance the prices of basic food com­modities including vegeta­bles, fruits and other. The ongoing increase in oil and energy prices might cre­ate problems for the gov­ernment in restricting the inflation rate at 21 per­cent during the current fis­cal year. Not enough, in­flation-hit people are left with no other choice ex­cept to sell their assets like animals to pay power bills. ‘I had to sell my buffalo at throwaway price to pay the electricity bill of two months,” a resident of Pun­jab told this reporter. The ministry of finance had al­ready warned of higher in­flation rate in the months to come. “The two massive fuel price hikes witnessed in the month of August 2023 and upward adjust­ment in energy tariffs, would strain the inflation­ary pressures in the com­ing months,” the ministry noted in its recent report.

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