Amidst an already severe economic crisis, Pakistan is bracing for another blow as the prices of petroleum products are on the brink of surging at the onset of September. The country’s economic challenges are exacerbating, and this impending price hike is expected to compound the woes faced by the population.
The Oil and Gas Regulatory Authority (OGRA) is reportedly mulling over the recommendation of a substantial price hike, with Rs12 per liter for petrol and Rs14.83 per liter for diesel, starting from September 1.
This anticipated surge in petroleum prices comes as a double blow for the citizens already grappling with the impact of inflation. Protests against inflated electricity bills have taken to the streets, and this latest development threatens to further intensify the challenges faced by the people.
According to reports in local media, the expected surge will see petrol prices rise by around Rs12 per litre from September 1, 2023. Diesel prices are also anticipated to increase significantly, with a rise of Rs14.83 per litre.
Factors at Play
Multiple factors contribute to this impending price hike. The increase in global oil rates combined with the depreciation of the local currency has led to an impact on the exchange rate, setting the stage for an imminent rise in petroleum product prices.
This isn’t the first time Pakistan has witnessed a surge in petroleum prices. Over the past few weeks, the cost of petrol and diesel has surged significantly, with petrol climbing by Rs37.50 and diesel by Rs40 per litre.
Continuing Economic Challenges
While the caretaker government previously stunned the public with a sharp increase in petroleum product prices earlier this month, the ongoing economic challenges persist. Officials hint at another potential hike, further straining the already burdened masses.
The devaluation of the Pakistani currency against the US dollar, surpassing the triple-century mark in the interbank market, is closely linked to the revocation of import restrictions. This continuous depreciation is a contributing factor impacting the price of petrol.
Ripple Effects on Inflation
The anticipated increase in petroleum prices is expected to ripple across inflation, affecting various commodities, including essential food items. This poses additional challenges for a population already grappling with economic instability.
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While global oil prices haven’t witnessed significant fluctuations, the local scene tells a different story. The recent substantial increases in petrol and diesel prices have shaken the economic landscape of the country.
Insiders familiar with the developments suggest that petrol and diesel prices may witness double-digit increments in the initial half of September. The crisis-ridden nation’s procurement of crude and POL products at elevated prices is believed to be a driving force behind the projected surge.
Electricity Tariffs and Widespread Concerns
As recent petroleum price hikes coincide with shocking increases in electricity tariffs, concerns are growing, particularly among the salaried class, who are already bearing the brunt of economic turmoil.
In the midst of this crisis, Pakistan’s adherence to the International Monetary Fund’s (IMF) conditions holds paramount importance. Failing to meet these conditions could jeopardize billions of dollars in debt, potentially exacerbating inflation and worsening living conditions for the population.