Consumers will once again face a challenge as both gas and electricity prices have been jacked up. The Economic Coordination Committee (ECC) has approved a 335 percent increase in gas prices while reports suggest that power tariff in Pakistan will be increased to 24.8 rupees per unit by October of 2022. The rising cost of fuel and the IMF’s condition to increase revenue to settle the circular debt has negatively affected the consumers of both of these commodities. Gas prices have always been lower than most other commodities, however, now a target is placed on everything. If such a situation prevails, it is likely that people will move towards the usage of traditional methods of wood and biofuel for domestic uses of fire.
The current state of the nation’s economy may best be characterized as disastrous. A balance of payments imbalance exists, inflation levels are at an all-time high, the economic growth rate is anticipated to slow further, and dollar rates are gradually rising alongside gasoline prices. A debt issue also exists, and it is doubtful that it will be resolved anytime soon. The country is now experiencing an economic downturn, which may be made worse by the current economic policies. The increase in prices will lead to a further decrease in economic activity as many in the industry will not be able to produce with such high costs, this will lead to the shutting down of businesses which will further lead to unemployment and an eventual depression for the economy.
In June, inflation reached its highest point of 21.3 percent. At the moment, inflation has made people bend over backwards to fulfil their basic needs and even those are not being fulfilled. Due to the sharp increase in fuel costs, other goods have also seen previously unheard-of price increases. Additionally, due to Indonesia’s export ban on cooking oil because of local shortages, cooking oil prices have skyrocketed. Cooking oil is a necessity, but more and more people will not be able to afford it in the coming days as the prices have more than doubled. Inflation has also targeted the transport sector, the largest increase of 62.2 percent, which was seen in the transportation index, making it almost difficult for individuals to travel without spending an arm and a leg.
The rising fuel, electricity and gas prices will have disastrous consequences for the economy. The government is bound to follow the IMF’s programme and they believe it will bring about a positive change in the economy. However, most economists are of the opinion that it will further deteriorate the country and any layman can see that happening. The economy is moving towards a great economic slump and rising inflation levels will lead to unemployment which will then slow down economic activity and therefore the economic growth rate. To come out of this will take a significant amount of time and by then many would have fallen below the poverty line.
