Last Updated: September 03, 2023, 06:11 IST
Supporters of Jamaat-e-Islami chant anti-Pakistan government during a strike against inflation in Hyderabad, Pakistan, Saturday, Sept. 2, 2023. (AP Photo)
Pakistan faces inflation challenge, raises fuel prices as part of IMF deal, impacting consumers and economy
Pakistan’s caretaker government this week pushed through a sharp increase in the price of petrol by rupees 14.91 per litre and high-speed diesel (HSD) by rupees 18.44 per litre. The spike brought the petrol price to Pkr 305.36 per litre and HSD to Pkr 311.84 per litre.
“Owing to the increasing trend of Petroleum prices in the international market and exchange rate variations, the Government has decided to revise the existing consumer prices of petroleum products,” Pakistan’s Finance Ministry announced the decision on social media platform X on Friday.
Fuel Hike
The latest price hike comes less than a month after the interim government on August 15 raised fuel prices by up to rupees 20 per litre. That jump in petroleum prices had come after similar hikes by the previous government on August 1.
According to Dawn newspaper, the price hike is based on existing tax rates and import parity prices, mainly because of currency depreciation and a slight increase in international oil prices.
The rupee continued to extend losses sliding against the US dollar in the interbank market. On September 1, it closed at a record low of 305.54 Pakistani rupees (Pkr).
Inflation
The cash-strapped country’s inflation rate stayed above target at 27.4 percent in August, data showed on Friday, as reforms set out as conditions for an IMF loan complicate the task of keeping price pressures in check.
Under the caretaker government, Pakistan is embarking on a tricky path to economic recovery after a $3 billion loan programme, approved by the International Monetary Fund (IMF) in July, averted a sovereign debt default.
Reforms linked to the bailout, including an easing of import restrictions and a demand that subsidies be removed, have already fuelled annual inflation, which rose to a record 38.0 percent in May. Interest rates have also risen, and the rupee hit all-time lows. Last month the currency fell 6.2 percent.
Protests
On Saturday, Pakistani traders went on strike against the soaring cost of living, including higher fuel and utility bills and record depreciation of the rupee against the dollar, which has led to widespread discontent among the public.
The traders pulled their shutters down across the country, while protesters burned tires on roads to express their anger, according to AP. The strike was called by former lawmaker Sirajul Haq, who heads the religious political party Jamaat-e-Islami, and it was largely endorsed by trade and business bodies, market associations, lawyers associations and transporters.
Pakistan’s commercial and economic hub, Karachi, was almost closed and vehicle traffic was slim on roads, with all markets and shopping centers shut.
“We have shut our shops in protest so that our message reaches the ruling class. If they don’t consider our problems, we will devise further strategies, said Fahad Ahmed, a trader in Karachi, adding, “If you pay 100,000 rupees ($330) in rent for your shop and you have to pay an equal amount in electricity bill, how can you survive?”
(With agency inputs)
