ISLAMABAD: The prices of petrol and diesel hit a record high on Tuesday, as the newly installed caretaker government raised fuel prices by up to Rs20 per litre, another second massive hike in a fortnight that is likely to further stoke inflation, which had cooled over the past two months.

The new petrol price will be Rs290.45 per litre from today (Wednesday) after an increase of Rs17.50 per litre, the finance division said in a notification. High-speed diesel would be even more expensive, with its price going up by Rs20 to Rs293.40 per litre.

The Ministry of Finance announced the revised prices late in the night after clearance from caretaker Prime Minister Anwaarul Haq Kakar, who was sworn in on Monday.

The finance division said prices of the two key fuels were raised because petroleum prices in the international market had increased during the last fortnight.

Petrol rate jumps Rs17.5 to cross Rs290; diesel rises to Rs293.4 after Rs20 increase

However, the government notification did not announce any change in the prices of kerosene and light diesel oil.

The latest jump in petroleum prices came on the heels of a similar hikes by the outgoing government on Aug 1. This means that fuel prices have jumped by nearly Rs40 per litre in just 15 days.

The price of high-speed diesel had previously peaked at Rs293 per litre in March this year. Its price is considered highly inflationary as it is mostly used in heavy transport vehicles, trains and agricultural engines like trucks, buses, tractors, tube wells and threshers and particularly adds to the cost of vegetables and other eatables.

Similarly, petrol prices had earlier peaked at Rs282 per litre in mid-April, but later declined to as low as Rs253. The product is mostly used in private transport, small vehicles, rickshaws and two-wheelers and directly affects the budget of middle- and lower-middle class citizens.

According to the latest data, inflation measured by the Consumer Price Index (CPI) basket of goods and services was 28.3 per cent for July — a little respite compared to 29.4pc in June and record 38pc in May but still far higher, particularly considering the high-base effect.

Finance ministry data shows the price of petrol (i.e. Rs290.45 per litre) now stands 24pc higher than what it was exactly a year ago (Rs233.91 in mid-August), and 35pc higher than its lowest point over the past year (Rs214.8 in mid-December).

At present, the general sales tax on all petroleum products is zero, but the government is charging a petroleum development levy of Rs55 per litre on petrol and Rs50 per litre each on HSD and high-octane blending component (HOBC) and 95 RON (research octane number) fuel.

The government is also charging about Rs18-22 per litre customs duty on petrol and high-speed diesel.

Petrol and high-speed diesel are major revenue spinners for the government, with their monthly sales touching about 700,000 to 800,000 tonnes compared to just 10,000 tonnes of monthly demand for kerosene.

Published in Dawn, August 16th, 2023