Islamabad: Pakistan’s finance ministry has announced an increase in petrol prices due to the steep depreciation of the rupee.
The move is part of the country’s efforts to boost revenue as negotiations continue with the International Monetary Fund (IMF) for bailout funds and to avoid default.
With the increase of Rs22.20, the petrol now costs Rs272 ($1.02 or Dh3.76) per litre. High speed diesel will now cost Rs280 a litre after an increase of Rs17.20.
Kerosene and light diesel oil prices were increased as well, the finance ministry said.
Pakistan revises the price of petrol and diesel every fortnight.
The latest price hike reflects the rapid devaluation of Pakistan’s currency since the government liberalized exchange rate policies and removed the artificial cap on local currency.
The fuel price hikes came hours after the government proposed raising the goods and services tax (GST) to 18 per cent from 17 per cent through a supplementary finance bill to increase the revenue during the current fiscal year. The bill also includes raising taxes on luxury items, first-and business-class air travel, cigarettes, and sugary drinks.
Soaring gas and food prices have catapulted Pakistan’s inflation to a 48-year-high. Official data said that Pakistan’s inflation rate surged to 27.6% on a year-on-year basis in January 2023. The rise in prices of food, gas, electricity, and rent is hitting middle-class Pakistanis the hardest, with their earnings unable to keep up with the cost of living. This inflation is driven by currency devaluation, rising interest rates, fuel prices, and import restrictions.
Millennial members of Pakistan’s middle class say they are cutting back their spending.
“It’s hard to be optimistic because there has been no stability for months. Even the middle class of this country is worried about the prices of bread, milk, and eggs” said Amjad Ali, 34, an Islamabad resident who works in the financial sector.