Daily Times

It’s safe to assume that Black Gold will truly adopt its name in worth, because that’s where fuel prices are headed.

As of this week, fuel prices in Pakistan have risen a whopping 12 rupees, amounting to a total of about 160 rupees per liter. While some assume its government helplessness, its repetitive inflation fears creeping along consumption and assumption.

Pakistan isn’t just facing one recurring problem. It is facing one after the other, simultaneously. Along with the increase in net food prices at 17 per cent, consumers are likely to acknowledge a higher budget divide for basic commodities than before.

Let’s consider the market for tomatoes. Back almost a decade ago, tomatoes would cost 25 rupees a kilo, which would equate to about 25 cents, at that point of time. Today, a fluctuation between one dollar and a dollar and a half in tomato prices is driving anger and uncertainty.

To help combat such conditions, the IMF, as re-iterated previously has allocated six billion dollars for a bail-out. Despite this, the country sees no forefront for combating this inflating inflation crisis.

Clearly, there is a cost push-inflation occurrencs. In which case, both our bank rates and inflation rates are positively corelated, leading to an increase per unit in inflation. One of the solutions is a contractionary policy (to avoid panic expenditure and hoarding). The only way to deal with this is to let the price hikes march forth. Other options seem inevitably disastrous.

It’s unconscionable to think of a world with lower price levels, considering ongoing fears of more pandemic outbreaks, and the alarm bells of a possible European war.

It’s unconscionable to think of a world with lower price levels, considering ongoing fears of more pandemic outbreaks, and the alarm bells of a possible European war, after more than 70 years. If anything, factors like panic buying, and rapid consumption would surely lead to a negative recognition of the market system, globally.

The US alone is facing an inflation crisis, with crossroads between these price hikes, and consumer spendings. Since the Pandemic began-excluding the very first month-the US has seen a tremendous hike in Real personal consumption expenditures, adding 0.5 trillion from pre-pandemic levels.

Consistent with previous trends, this number was an expected cap, but an externality was the number on Payrolls. Expenditure on payrolls starkly fell during the first year of the Covid-19 Pandemic. As we speak, it persistently finds its way to the 152-million-dollar price tag it was set at in 2019. Currently, it stays at 149 million, again sloping constant, signaling a recovery going south.

This certainly causes increases in debt ceilings, not just for the United States, but everywhere. Pakistan has topped an eight per cent inflation rate in its endeavours to stabilise conditions for the price systems.

Pakistan’s GDP to debt rate is 80 per cent as of this year. That means 80 per cent of the economy is a debt owed to other firms or nations around the world.

The latest of agitations features price hikes in Petroleum. Well, here’s the story. Crude Oil WTI (West Texas Intermediate) (NYM $/bbl)-Front Month, that is in the first Quarter, has established a $90 cap on the fuel.

A trip down memory lane may also help recall, the same barrel price in negative. It was -40 dollars a barrel. This is certainly a creeping recession, with fluctuating territories, both in the economy, and economic predictors.

Price hikes also measure the price of production. A consequential chain reaction has also succeeded in the energy sector after these price hikes. Electricity prices have gone up 6.1 rupees per unit. The CPPA has also informed the energy regulators of the price hikes and of the production cost they currently face i.e. at about 12.1 rupees. These prices are likely to increase with logistical terming and cost increases, signaling a higher inflation rate in the weeks and months to follow.

The writer is a freelance columnist.