Why have petroleum and essential products become more expensive in Pakistan?

According to a notification issued by the Interior Ministry today, the prices of petroleum products have hiked while the prices of essential commodities are already increased.

The question is, why was it necessary to make essentials more expensive? The increase in prices of petroleum products by the government is not new, yet the hiked prices have shaken the citizens.

Prices of petroleum products

Today, the Ministry of Finance issued a notification regarding the increase in the prices of petroleum products, under which the price increased from Rs 9 to 12 per liter. Petrol increased by Rs 10. 49 paise to Rs 137.79 paise per liter.

World market situation

Yesterday, the price of crude oil in the international market reached a three-year high. Brent crude hit $85 a barrel, the highest since October 2018, and the US crude rose 1 percent. 

Ghee, cooking oil, and electricity

Utility stores yesterday increased the prices of various items including ghee and oil. The prices of different brands of ghee were increased from Rs 40 to Rs 1,090 while the price of Dalda ghee was increased to Rs 109 per kg. A 10 liter can have gone up by Rs 1,090.

The government yesterday increased the price of electricity by Rs 1.68 per unit, which was applied in the form of quarterly tariff adjustment. The federal cabinet has approved to increase the price of electricity with effect from October 1.

Proposal to reduce petrol price

Mian Zahid Hussain, chairman of the National Business Group of Pakistan, said five days ago that the government gets oil from Rs 85 to Rs 91 per liter on which Rs 25 per liter is being earned. If the government reduces taxes, it will have a positive effect on prices.

IMF demands

During a virtual meeting earlier this month, the IMF proposed raising the annual revenue target to 63 trillion instead of 58 trillion. The IMF demanded that privatization be expedited and the base electricity tariff be increased by Rs 1 per unit.

Wheat and flour prices

In early October, Special Assistant to the Prime Minister for Maritime Affairs Mahmood Moulvi along with Minister of State for Information Farrukh Habib held a press conference and said that Punjab and Khyber Pakhtunkhwa had released wheat from government warehouses and the Sindh government was favoring the hoarders.

Talking 8 days ago, Special Assistant Mahmood Maulvi said that the federation would release wheat to bring down the price of flour. In Punjab, a 20 kg bag of wheat flour sells for Rs 1,100 while in Sindh it sells for Rs 14,000 to Rs 1,500.

Prices of other essentials

In the last week, 22 essential commodities have gone up across the country. According to the weekly report of the Bureau of Statistics, the inflation rate stood at 12.66 percent while for the low-income earners it rose to 14.12 percent.

The price of tomato went up by Rs 11 per kg and LPG by more than Rs 43 per domestic cylinder, while prices of garlic, rice, peas, potatoes, and jaggery also went up. Sugar became cheaper by Rs6.72, live chicken by Rs4 per kg, and eggs by Rs6 per dozen.

Expert opinion

Economists say that Pakistan imports oil and after importing expensive petroleum products, they cannot be sold cheaply. There is not enough money in the national treasury to subsidize. Subsidies from utility stores also had to be scrapped, which pushed up inflation.

The price of coal was 50 50 in 2018 which is now 37 375. The price of palm oil was 2000 2000 which is now 000 5000. The government had to increase tax collection and increase the price of electricity in view of the demands of the IMF.

Prices of essential commodities and food items rose as container rents rose in the global market. Container fares have tripled in the global market. Corona made pulses and other essentials more expensive.

Pakistan is self-sufficient in wheat and sugar but it is facing the problem of mismanagement of government because we export them to Afghanistan. Because of this, these things become expensive in which the mafia has a big role and the flight of the dollar against the rupee is also a big reason for inflation.

The rising dollar increases inflation across the country. The current government is having trouble keeping the dollar afloat, which is worrying about inflation for low-income earners, especially day laborers.