As global commodity prices continue to escalate, Pakistan is contemplating a significant increase in petroleum prices. The potential hike could range from Rs. 12 to Rs. 22 per liter, as revealed in the upcoming bi-monthly review.
Tahir Abbas, the Head of Research at Arif Habib Limited (AHL), in a recent conversation with The Express Tribune, indicated that if international oil costs persist in their upward trajectory, the government might be compelled to raise rates beyond the projected Rs. 12-22 per liter.
This comes on the heels of a recent surge in petrol and gasoline prices by approximately Rs. 20 per liter, which pushed the rates to an all-time high of Rs. 273. This increase was largely attributed to the conditions set by the International Monetary Fund (IMF) loan, which necessitated the government to pass on the burden of rising international commodity prices to local consumers.
Abbas further proposed a diesel price hike of Rs. 20-22 per liter and a petrol price increase of Rs. 12-13 per liter for the latter half of August. Over the past fortnight, refined product prices have seen a sharp rise of $13 per barrel, reaching $111 per barrel, while petrol prices have surged by $7 per barrel to $97 per barrel.
These potential price hikes are expected to impact August’s inflation reading. If inflation surpasses expectations, the central bank may consider raising its policy rate in September.
However, this proposed increase has been met with resistance. Khalid Tawab, a seasoned business leader from the Federal of Pakistan Chambers of Commerce and Industry (FPCCI), has urged the government to reconsider this decision. He suggests reducing the petroleum development levy (PDL), currently at Rs. 50 per liter, as a measure to provide relief to the public and businesses grappling with these escalating costs.