In Pakistan, back-to-back petrol hikes had been a normal thing to witness but from last 15 days inflation-stricken middle and salaried class has observed an alarming and unprecedented surge in petrol prices, with rates skyrocketing by nearly Rs. 40 per liter.
Adding more pain to financial woes, last night, the new interim government announced a staggering increase of Rs. 17.50 per liter in petrol prices. Surprisingly enough, this move comes right after the 15 days, on August 1st, when previous government, part of the PDM coalition, raised petrol prices by Rs. 19.95.
Ill Concieved Decisions – The Reason
The matter is not as simple as we are made to believe. Uneven surge in fuel prices in international oil markets is now presented as a simple and the only reason behind these surges. This could be a dark horse but the main driving force pushing the fuel prices to record high Rs. 300 appears to be a series of not-well-thought economic decisions that lacked foresight, forcing the previous government to seek an IMF bailout package and subsequently removing subsidies while introducing heavy taxes on fuel.
This abrupt increase has unleashed a cascade of economic repercussions, leaving the masses grappling with the burden of escalated living costs. The impact of these soaring petrol rates extends beyond just the fuel pump, seeping into various aspects of daily life and amplifying the challenges faced by an already vulnerable segment of society.
Heavy Taxation on Fuel: A Double Whammy
To bridge the fiscal gap, the government resorted to heavy taxation on fuel in terms of petroleum levy currently standing at Rs.55, which the Interim PM Kakar intends to increase to Rs. 60. And again the reason is to extends support the International Monetary Fund (IMF) Programme.
This approach disproportionately will affect the middle-class, as they are the ones who heavily rely on private vehicles for transportation due to limited public transport options. With the recent hike of Rs. 17.50 per liter, the government’s decision to levy excessive taxes on fuel becomes even more pronounced, potentially pushing more families into financial distress.
Hyperinflation – The Impact
The recent upticks in petrol prices will directly affect inflation rates – another unfortunate event for poverty-stricken class of the country. Where even a one-time rise in fuel prices rise unleashes an overall rise in consumer goods, also creates a vicious cycle where the middle-class not only faces higher fuel costs but also grapples with increased prices for everyday essentials. As inflation erodes purchasing power, the masses struggles to maintain their standard of living, potentially resulting in reduced consumer spending and overall economic slowdown.
What do you think about the recent surge in petrol prices? Tell us in the comments section.
