May 29, 2023

Masses reeling from hiked petroleum prices

By Sulman Ali

Last week, the government, quite expectedly, increased the price of petrol up to Rs. 12.03. Generally termed as a ‘petrol bomb’ the move has caused serious reservations among the masses.

There is growing apprehension against the expected wave of inflation, which is aggravated every time petrol prices are increased. As always, the government is defending the decision, while the opposition is criticising it, dubbing it a ‘cruelty’.

Commenting on the increase, Finance Minister Shaukat Tareen said, “Following the 166 per cent increase in international petroleum prices since November 2020, the government is continuously losing its revenue from sales tax [and] levy, just to protect common people from higher prices.”

Meanwhile, Special Assistant to Prime Minister Shehbaz Gill said, “The government had to increase the prices of petroleum products as per the trend in the international market, expressing the hope the petroleum prices would decrease in a few months.”

On the other hand, opposition leaders including Pakistan People’s Party (PPP) Chairperson Bilawal Bhutto Zardari and Pakistan Muslim League-Nawaz (PML-N) President Shahbaz Sharif have assailed the government over the hike.

Castigating the increase, Bilawal said, “The increase in prices of petroleum products is robbing the pockets of the people. We will not accept it.”

“Rising petrol price is a cruel step. People have to come out against the tyrannical government,” said Shehbaz Sharif.

If we look at the inflation numbers, the petrol price increase has hiked the price of 28 commodities, including milk, powdered milk, firewood, rice and tea. Chicken price has climbed 2.89 per cent, ghee 1.08 per cent, garlic 10.53 per cent, tomato 4.35 per cent and matches 2.17 per cent.

Furthermore, the weekly inflation report mentioned that inflation rate has increased by 0.22 per cent last week, taking the overall inflation to 18.09 per cent on the annual basis.

Farooq Pasha an economist at the Standard Chartered Bank said that the global price has been on a rising trend since start of 2022 and currently stands at seven-year high of $95 per barrel. “The pass through of global oil prices to domestic fuel prices can have an adverse impact on inflation in Pakistan,” he said. The economist further said that their forecast of average inflation is 9% and 8.2% in FY22 and FY23, respectively.

The State Bank of Pakistan expects inflation to be in range of 9 to 11 per cent. In its recent monetary policy, the SBP has forecasted an increase in inflation in next few months due to low base effects, one-off cost-push pressures from energy tariff increases and removal of tax exemption in Finance (Supplementary) Act. But the State Bank is expecting that the inflation will drop to 5-7 per cent in FY23.

Earlier, the Consumer Price Inflation (CPI) rose to 13 per cent in January 2022, which is a two-year high. In comparison, the CPI stood at 12.3 per cent for last two and half years. The CPI more than doubled to 13 per cent from 5.7 per cent between January 2021 and January 2022.

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