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.
