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Finally, here comes an end to a consecutive downtrend featuring four reductions in petrol prices in Pakistan. Media reports have revealed that the incumbent government is gearing up to increase fuel prices by Rs. 7 on 30 June for the next fortnight.

New Petrol Price

If it happens, the new petrol price will reach Rs. 265.16 from the previous Rs. 258.16. Meanwhile, the high-speed diesel (HSD) price is anticipated to surge by a massive Rs. 10.50 per liter, taking it to the new rate of Rs. 277.89 from the old Rs. 267.89.

The Global Price Trend

It is pertinent to mention that the upcoming hike in petrol prices is due to an increase in international oil prices, which in turn is affecting the price trend in Pakistan. Interestingly, fuel prices in the country have yet to receive a series of crude shocks in upcoming revisions. And, the reason is an uptick in petroleum levy from Rs. 60 to 80 per liter for petrol and diesel.

If you remember, the Finance Minister Muhammad Aurangzeb proposed this new adjustment  in fiscal year 2024-25 budget. Earlier, there were also reports that the government may impose an 18% GST on petroleum goods, which currently stands at 0%.

The old Rs. 60 per liter levy was also inflicted to appease IMF – seems threshold has been stretched amid a dearth of new ideas about how to enhance revenue through taxation whilst ending subsidies on consumption.

The Effect

Adding the levy and global price effect, the petrol prices are likely to clock between Rs. 290 and Rs. 300 per litre – again the record high fuel prices in Pakistan. Consequently, the move will add more burden further shattering the daily living costs of masses already grappling with hyperinflation.

The potential impact of these hikes extends far beyond the pump. Transportation costs for essential goods and services will likely rise. Additionally, businesses reliant on fuel for operations could face increased costs, potentially impacting employment and overall economic activity.

What do you think about the government’s upcoming new move? Will it be justified? Drop your thoughts in the comments section.