Islamabad – Pakistan has witnessed consecutive increases in petrol and diesel prices, pushing rates to historic highs. As of October 1, 2021, petrol is priced at Rs 127.30 per litre, high-speed diesel at Rs 122.04, and kerosene at Rs 99.31 per litre.
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The government, citing global crude oil price increases, claims that Pakistan’s fuel prices remain lower than many regional countries, especially India and Bangladesh. Energy Minister Hammad Azhar stated that despite price hikes, the government has limited the impact on consumers by gradually reducing taxes and keeping petrol rates below international levels. Finance Minister Shaukat Tarin added that inflation in countries like the UK has been higher than in Pakistan.
However, economic analysts argue that comparing fuel prices alone gives an incomplete picture. Dr. Ikram Ul Haq of Arif Habib Securities explained that while global crude oil prices have risen to around $78 per barrel from an average of $53 last fiscal year, the real burden on Pakistanis is compounded by a weakening rupee and rising import costs.
Dr. Haq emphasized that true affordability should consider purchasing power, not just nominal petrol prices. Pakistan’s per capita income stands at $1,279, lower than India’s $1,961 and Bangladesh’s $2,227. Therefore, even if petrol is cheaper in local currency compared to neighboring countries, it consumes a larger share of income for the average Pakistani.
Additionally, inflation in Pakistan is 8%, higher than India’s 4.6% and Bangladesh’s 5.9%, further affecting purchasing power. Dr. Haq noted that comparisons should include overall cost of living, including staples like wheat and sugar, which are significantly more expensive in Pakistan than in neighboring countries.
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Experts warn that the government’s focus on nominal fuel comparisons masks the real economic challenges faced by citizens, including shrinking incomes, limited purchasing power, and rising dependence on imports for essential commodities.