As global commodity prices continue to surge, Pakistan is facing the possibility of another petrol price increase by the next bi-monthly review after August 15. The recent hike in petrol and gasoline prices by approximately Rs. 20 per liter, pushing rates to Rs. 273, was a result of the International Monetary Fund (IMF) loan conditions that compelled the government to pass on rising international commodity prices to local consumers.
In a recent discussion with The Express Tribune, Tahir Abbas, the Head of Research at Arif Habib Limited (AHL), expressed his concerns over the potential price hike. He warned that if international oil costs keep rising, the government may need to raise rates beyond the current projection of Rs. 12-22 per liter.
Abbas further recommended a diesel price hike of Rs. 20-22 per liter and a petrol price increase of Rs. 12-13 per liter for the second half of August. Over the past two weeks, refined product prices have escalated by $13 per barrel to $111 per barrel, while petrol prices climbed by $7 per barrel to $97 per barrel.
The looming price increases could have significant effects on August’s inflation reading. In response, the central bank may consider raising its policy rate in September if inflation surpasses expectations.
Amidst these concerns, Khalid Tawab, a seasoned business leader from the Federal of Pakistan Chambers of Commerce and Industry (FPCCI), has urged the government to reconsider raising petroleum prices. He proposed a reduction in the petroleum development levy (PDL), currently at Rs. 50 per liter, as a means of providing relief to the public and businesses.
As Pakistan grapples with rising international commodity prices and their potential impact on the domestic economy, consumers and businesses anxiously await the government’s decision on petrol prices in the coming weeks.
