The fall in the value of the Pakistani rupee against the US dollar is expected to cause a surge in inflation, with petrol and diesel prices projected to increase by over Rs13 per litre due to the exchange rate, potentially reaching double digits if the dollar continues to appreciate. Additionally, the rise in dollar value will also lead to further increases in electricity tariffs, making the lives of citizens more difficult.
Short-term inflation in Pakistan increased by 25.34% on a year-on-year basis due to a surge in prices of kitchen items, although it decelerated from the previous week's rate of increase.
The Oil and Gas Regulatory Authority (Ogra) is likely to recommend a hike in petroleum products prices in Pakistan due to an increase in global oil rates and depreciation of the rupee against the US dollar, with petrol expected to increase by Rs12 per litre and diesel by Rs14.83 per litre from September 1, 2023, leading to concerns of further inflation in the country.
Diesel prices in the US have reached their highest levels since March and are expected to continue rising due to refinery disruptions and increased demand during the fall agricultural harvest season and winter heating months, posing challenges for retailers and putting upward pressure on prices.
The caretaker government of Pakistan has increased petrol and diesel prices by over Rs14 due to the rising trend of petroleum prices in the international market and exchange rate variations.
The recent increase in energy prices in Pakistan has led to protests over high inflation and electricity bills, with demonstrators burning utility bills, blocking highways, and attacking power company offices. The caretaker government has refused to lower energy prices without approval from the IMF, and has further increased petrol and diesel prices by over 14 Pakistani Rupees (PKR), surpassing PKR 300.
Pakistan's central bank is expected to increase interest rates in order to address high inflation and bolster foreign exchange reserves, which have led to a record low value for the rupee. A Reuters poll shows that 15 out of 17 analysts are forecasting a rate hike, with some expecting an increase of at least 150 basis points. The country's economic recovery is being challenged by IMF loan conditions, import restrictions, and subsidies removal, which have caused spikes in energy prices and elevated food inflation.
The caretaker government has increased the price of petrol and high-speed diesel (HSD) in response to rising international oil prices, with petrol now costing Rs331.38 per litre and HSD priced at Rs329.18 per litre.
The short-term inflation in Pakistan increased by 26.25% due to a rise in the retail price of vegetables, particularly tomatoes and onions, caused by the closure of the Torkham border with Afghanistan.
The recent record-breaking increase in petrol prices in Karachi has had severe consequences for ordinary people, with many unable to afford fuel and resorting to alternative means of transportation, such as motorcycles or bicycles, while others contemplate selling their vehicles altogether.
The caretaker government in Pakistan has announced a historic hike in petrol and diesel prices, with fuel costing over ₹330 per litre, further burdening the public already facing high inflation.
The unprecedented increase in fuel prices in Pakistan is expected to cause a significant rise in inflation, with the Consumer Price Index projected to reach as high as 30% to 32% in September 2023.
Pakistan's exports saw a significant increase of 22.45% in the first two months of the fiscal year 2023-24, reaching Rs1.27 trillion, while imports decreased by 2.42%.