Karachi, September 16, 2023 – Pakistan non-elected caretaker government has scored a hat-trick by announcing yet another massive hike in petroleum prices. These successive increases come despite growing concerns and protests from the nation, as the government appears to disregard the economic hardships faced by its citizens.
Caretaker Prime Minister Anwar-ul-Haq Kakar, who assumed office on August 14, 2023, oversaw a cumulative increase of up to 21 percent in petroleum prices during his one-month tenure.
Petroleum prices play a crucial role in forecasting the costs of essential items, particularly electricity bills. The nation is already grappling with soaring electricity bills, leading to widespread protests demanding reductions in charges. Unfortunately, the recent hike in petroleum prices is likely to exacerbate the situation, as it will trigger fuel adjustments, resulting in higher electricity bills in the coming days.
The previous government, led by Shehbaz Sharif, had left petroleum prices unchanged as of August 1, 2023, with petrol priced at Rs 272.92 per liter and diesel at Rs 273.40 per liter. However, the caretaker government, through three successive announcements on August 15, August 29, and September 15, implemented substantial increases.
Over the course of these three announcements, the price of petrol surged by Rs 58.46 per liter, marking a staggering 21.37 percent increase, while diesel saw a hike of Rs 55.78 per liter, equivalent to a 20.40 percent increase.
Consequently, the new prices of petroleum products, effective from September 16, stand at Rs 331.38 per liter for petrol and Rs 329.18 per liter for diesel.
This latest surge in petroleum prices is expected to trigger a new wave of inflation, contrary to the State Bank of Pakistan’s (SBP) recent prediction of easing prices for essential goods. In its latest monetary policy announcement on September 14, the SBP maintained the policy rate at 22 percent but claimed that inflation would decrease in the coming days.
Additionally, high petroleum prices could incentivize the smuggling of petroleum products. Authorities have launched a massive crackdown against smuggled Iranian oil, but the domestic price hikes may further fuel smuggling activities along the Pakistan-Iran border.
The successive increases in petroleum prices have left the Pakistani public grappling with rising living costs, and it remains to be seen how the caretaker government will address these concerns in the run-up to the next general elections.