Will govt now go for more fuel price hike to 'control' inflation?
Business
People are already enraged over inflated electricity bills, they can’t be squeezed more
LAHORE (Web Desk) – In other news, Reuters has reported on Tuesday that Japan's government is considering extending until year-end fuel subsidies to keep gasoline prices below 180 yen a litre [yen’s exchange rate currently stands at Rs2.07].
For this purpose, it is working on a separate budget to finance this measure after Prime Minister Fumio Kishida instructed ruling party officials last week to consider steps to extend the fuel subsidies which were introduced in January 2022 to help ease cost of living pressures.
Read more: Fighting rising prices: Japan considers extending fuel subsidies to year-end
Why is this news worth consideration? Because it shows how a government is protecting its citizens amid a cost of living crisis triggered by a persistent inflation. Everyone knows how and why the higher fuel prices boosts the inflation further thanks to inflated transportation cost.
No rocket science or a degree from any prestigious foreign university is required to understand this.
However, there is an even greater concern for the people in Pakistan. The fortnightly review is round the corner – just two days away – as the government will announce new prices for petroleum products with media reports suggesting up to Rs10 per litre hike for petrol and Rs20 in the case of diesel.
Now, there are some questions to be asked: Will it act like Japan or act in a manner to boost revenue collection and please the IMF by following its guidelines religiously? Will it continue hiding behind the IMF over the failure to expand tax base to enhance revenue collection? Can it afford squeezing the people more?
Read more: IMF condition dragging Pakistan rupee down the slope with no stop in sight
NO ROOM LEFT TO FURTHER SQUEEZE THE PEOPLE
Politically speaking, any further price hike would produce devastating consequences as the people are already enraged due to the inflated electricity bills. Going for the price hike in the case of petrol and diesel is going to only add fuel to the fire.
Read more: Negative impacts of IMF conditions force govt for smaller power tariff hike
But most importantly, there is no room for squeeze the people more as they are now worried about buying food items because of a shrinking purchasing power. They have reached the limit and won’t be able to digest the idea of another set of price hike in the name of national interest.
If the government opts for an increase in fuel prices, then the results could only be frightening for an overwhelming majority of the people. It will further escalate inflation by boosting transportation cost and food prices.
FIGHTING INFLATION BY BOOSTING INFLATION
Both the IMF and the foreign educated experts at home have been selling the idea that the interest rates must remain high to control inflation. What is the result? A crippled economy with no expansion in businesses and job opportunities or wage growth.
And the very set of people also advocate higher fuel prices as well as power and gas tariffs. Isn’t a self-contradictory policy?
That’s why people are asking a simple question that how one can expect a decline in inflation when the petrol, diesel, electricity and gas prices are being hiked religiously?
But this Chinese puzzle can be solved easily if and when the government in Pakistan is able tell the IMF price hikes always produce more price hikes.
