The prices of petroleum products hiked by 6.45 percent today after the international prices of crude oil crept up by just under two percent over the previous month. As a result, the prices of petrol and diesel rose by Rs 6 per litre. To the government’s credit however, the full price hike has not been passed on to Pakistani consumers as tax rates have been reduced. Had this not been done, diesel and petrol prices could have risen by over eleven rupees according to OGRA calculations. This however, is still unlikely to keep the political backlash of this development at bay. The rise in fuel costs will undoubtedly have an impact on all sectors, and the prices of basic food items will also likely be affected.
Additionally, the Pakistan Tehreek-e-Insaf (PTI) government had already increased the general sales tax (GST) on petroleum products to a standard rate of 17 percent across the board in January 2019. Before this, the GST on petrol was eight percent, and 13 percent for diesel. This was yet another symptom of the government struggling to keep the national kitty from becoming completely depleted, as petrol and diesel generate large amounts of revenue for the government because of their consumption, which only grows every day.
It should not be forgotten that Pakistanis’ wallets will soon receive another blow. On March 28, the government announced that it would be raising electricity prices by two rupees per unit. It has been projected that this will put an additional burden of Rs 200 billion on consumers. This is coming after electricity prices were raised in October last year.
All the while, the Rupee continues to slip against the Dollar. Consumer price inflation rose to 9.41 the highest point ever since 2013. Household budgets continue to be squeezed ever tighter in the PTI’s Naya Pakistan despite the generous loans it has secured from Saudi Arabia, the UAE and China. Clearly, this has not been enough. *