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Friday, June 14, 2024  
07 Dhul-Hijjah 1445  

Brace for impact: Petrol prices expected to rise again

Brokerage house predicts increase in benchmark interest rate
A representational image. Canva
A representational image. Canva

The recent hike of nearly Rs15 in the rate of petrol, with which the fuel rate crossed the Rs300 mark, is expected to follow another increase, as per reports.

Petrol is available at Rs305.36 in Pakistan after the August 31 notification of the finance ministry. It said that the government has decided to revise the existing consumer prices of petroleum products owing to the increasing trend of petroleum prices in the international market and exchange rate variations.

The basic price of the petrol or ex-refinery price was Rs232.36 per litre when the fuel price was increased. But the rate of ex refinery rate of petrol was Rs238.29 and diesel was Rs237.61, following a hike in international market rates and rupee depreciation.

It merits here to mention that the also collects petroleum development levy on petrol and diesel while other margins, including of the petroleum dealers, are also charged.

The Economic Coordination Committee increased Rs1.64 per litre on the margin of petroleum dealers, triggering apprehension of another increase in the rates of petrol and diesel on September 16.

There could be a Rs9.70 increase in petrol price while Rs11 in the diesel price, according to reports, fueling a further surge in inflation which currently stands at 27.4%.

Increasing interest rates is a common practice to tame inflation.

Reports say that the State Bank of Pakistan in its Monetary Policy Committee meeting on September 14 would increase the benchmark interest rate by 200 basis points, taking the interest rate from 22% to 24%.

In its recent statement, the central bank rejected such reports but on Friday a brokerage house reported that the interest rate would go up.

“We expect an increase of 200bps, taking the rate to 24% in the upcoming MPC meeting,” said Topline Securities, in its report released on September 8 available with the Business Recorder.

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