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.
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 prices of petrol and high-speed diesel (HSD) are expected to increase by Rs16 per litre and Rs13.66 per litre, respectively, in the upcoming fortnightly review, due to rising global oil prices and depreciation of the rupee against the dollar.
The caretaker government of Pakistan has raised petrol and diesel prices to record levels, leading to a surge in inflation and impacting the prices of essential commodities, while the country continues to invest in and expand its nuclear weapons program.
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 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.