As global commodity prices continue to rise, Pakistan may experience another wave of petroleum price increases ranging from Rs12 to Rs22 per liter during the final 15 days of August.
Tahir Abbas, the head of research at Arif Habib Limited, shared his views with local media and said that if international oil prices continue to rise, the government may declare a greater price increase than the anticipated Rs12–22 per liter.
The government increased the price of petrol and diesel at the beginning of August 2023 as required by the terms of the IMF loan.
According to Abbas, price increases of Rs20–22 per liter for diesel and Rs12–13 per liter for petrol are possible for the second half of August.
In the last 15 days, the price of refined goods has increased by $13 per barrel, reaching $111 per barrel, while the price of petrol has increased by $7 per barrel, reaching $97 per barrel.
The impact of these price rises, both recent and conceivable, may have a considerable impact on August’s inflation number. The central bank could be forced to raise its main policy rate in September if inflation surprises.
Khalid Tawab, a seasoned business leader from the FPCCI, has encouraged the government to rethink its plan to raise fuel prices in light of these worries.
He underlines the necessity of reviewing the petroleum development levy (PDL), which is now levied at Rs50 per liter, and advises changing it to supply petrol and diesel for local consumers at more reasonable rates rather than passing along the rise in commodity costs to them directly.
The obvious indicators of an economic downturn, such as the shrinkage of the large-scale manufacturing (LSM) sector and a drop in export revenues, are consistent with Tawab’s worries. These indications draw attention to the effects that rising oil prices may have on businesses, which might result in more closures and difficult economic times.
The present legislative elected term of the government is scheduled to end in the next ten days, therefore the business community is aware that their efforts to contact the departing administration to resolve these concerns are constrained by time.