Soaring costs

FOR millions of households already grappling with Ramazan inflation, the sharp increase in petrol and diesel prices could not have come at a worse time. Announced just weeks before Eid, the steep fuel price hike is rapidly cascading through the broader economy, intensifying an already difficult economic environment and tightening the squeeze on low- and middle-income homes. Fuel prices are never an isolated economic phenomenon. In an import-dependent economy like Pakistan’s, they act as a powerful transmission channel through which cost pressures spread across almost every sector. The most immediate impact is visible in transport fares, which began rising across cities within hours of the announcement. For millions who rely on public transport or motorcycles to commute to work, this translates into an unavoidable increase in daily expenses. The ripple effects do not stop there. Higher transportation costs are already feeding into food inflation, pushing up the prices of flour, vegetables and other essential kitchen items. Such spikes are particularly painful during Ramazan, when household budgets are already under strain because the rise in the prices of basic necessities disproportionately affects middle-class families.

The timing of the increase has, therefore, intensified public anger. Ramazan is traditionally a period when governments are expected to provide relief through targeted support for essential goods. Instead, households are confronting a cost shock that is quickly eroding purchasing power just as families begin planning for Eid expenses. The impact is particularly severe for millions of daily wage earners and gig workers whose incomes are modest and uncertain. For those earning barely enough to survive — often even less than the minimum wage — additional transportation or fuel costs consume a significant share of what they earn. The added cost frequently forces them to cut back on essential expenditures and reduce consumption in order to cope. None of this is to understate that global oil prices and fiscal constraints limit the government’s room for manoeuvre. Pakistan’s heavy dependence on imported fuel makes domestic prices highly vulnerable to international shocks. However, when tough policy decisions become unavoidable, their timing and relief measures become critical. The government did have some room to cushion the impact by reducing the petroleum levy on petrol and diesel. Such a move could have helped shield ordinary Pakistanis from the full inflationary effect of higher fuel prices.

Published in Dawn, March 13th, 2026

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