Petrol and diesel prices have reached an unprecedented peak. The recently inaugurated interim government, within just 48 hours of taking office, has implemented a fuel price hike of up to 20 rupees per liter.
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Quick Rise in Fuel Prices Worsen Inflation
This latest surge represents another significant escalation in a span of two weeks, a move that is anticipated to intensify the prevailing inflationary pressures. Notably, inflation had exhibited a downward trend over the preceding two months, making this recent development all the more impactful on economic dynamics.
Significant Hikes Begin
Starting today (Wednesday), there will be a fresh petrol price of Rs290.45 per liter, marking a rise of Rs17.50 per liter, as reported by the finance division in an official notification. Additionally, high-speed diesel will see an even steeper increase, with its price climbing by Rs20 to reach Rs293.40 per liter.
Finance Ministry’s Nighttime Announcement
Following approval from the newly appointed caretaker Prime Minister Anwaar ul Haq Kakar, who took office on Monday, the Ministry of Finance unveiled the updated prices during the late hours of the night.
Kerosene and Diesel Unchanged
According to the finance division, the prices of the two primary fuels were increased due to the recent uptick in international petroleum prices over the past two weeks. Nevertheless, the government’s notification did not indicate any alteration in the prices of kerosene and light diesel oil.
Back-to-Back Fuel Price Surges
The recent surge in petroleum prices closely follows a comparable increase imposed by the previous government on August 1st. Consequently, this translates to a substantial rise of nearly Rs40 per liter within a mere span of 15 days.
Impact on Transport and Agriculture
Back in March of this year, the price of high-speed diesel had reached its highest point at Rs293 per liter. This price hike has notable inflationary implications, given its predominant usage in weighty transportation vehicles, trains, and agricultural machinery such as trucks, buses, tractors, tube wells, and threshers. Notably, this increase contributes significantly to the expenses associated with vegetables and other food items.
Fluctuating Petrol Prices
Likewise, earlier in mid-April, petrol prices had reached a peak of Rs282 per liter, only to subsequently drop to as low as Rs253. This fuel is predominantly utilized in private transportation, smaller vehicles, rickshaws, and motorcycles, directly impacting the financial plans of individuals belonging to the middle and lower-middle classes.
Slight Easing Amid Ongoing Concerns
As per the most recent data, inflation, as gauged by the Consumer Price Index (CPI) encompassing various goods and services, stood at 28.3 percent in July. While this shows a slight relief compared to June’s 29.4 percent and the record-setting 38 percent in May, the figure remains significantly elevated, especially when accounting for the influence of a high-base effect.
Up 24% from Last Year, 35% from Lowest
Data from the finance ministry reveals that the current petrol price of Rs290.45 per liter is now elevated by 24 percent compared to its value precisely a year ago (Rs233.91 in mid-August). Additionally, it reflects a 35 percent increase from its lowest point in the past year (Rs214.8 in mid-December).
No Sales Tax, but Petroleum Development Levy on Fuels
Currently, there is no general sales tax applied to all petroleum products. However, the government has implemented a petroleum development levy, amounting to Rs55 per liter on petrol and Rs50 per liter on both high-speed diesel (HSD) and high-octane blending component (HOBC), as well as 95 RON (research octane number) fuel.
Customs Duty on Fuel
The government is also charging about Rs18-22 per liter customs duty on petrol and high-speed diesel. Petrol and high-speed diesel play a significant role in generating revenue for the government. Their monthly sales reach approximately 700,000 to 800,000 tonnes, in stark contrast to the relatively low monthly demand of just 10,000 tonnes for kerosene.
Now let’s see what the future holds for us?
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