Pakistan is a strong and resilient nation of sheep being herded by a pack of wolves. No matter what happens, it is extremely difficult to goad this nation to protest. The recent inflationary pressures are no exception as the people have quietly accepted their fate and are willingly doling out more to buy the same or lesser amount of goods every month. No one appears concerned by the high cost of maintaining an inefficient government machinery; or the spate of wasteful expenditures on misguided projects; or the high cost of borrowing; or the continually rising costly imports; and the woeful inadequacy of revenue-generation enhancement.
After the devaluation of the Pak Rupee against the US Dollar in December 2017, which has seen the Dollar trade at Rs.112 against the Rupee, the year 2018 has ushered in an era of rising inflationary pressures for the people of Pakistan. The floodgates have been opened and the nation should prepare to pay more for what they purchase.
On a comparative basis since December 31, 2017 the oil prices in Pakistan have risen by a significant amount:
RISING OIL PRICES
The Month-on-Month price increases are shown above (MOM%) and since December 31, 2017:
- Petrol is up by Rs.10.60 per liter or 13.68 per cent.
- High Speed Diesel (HSD) is up by Rs.8.50 per liter or 14.54 per cent.
- Light Speed Diesel (LSD) is up by Rs.13.18 per liter or 25.29 per cent.
- Kerosene is up by Rs.18.88 per liter or 32.79 per cent.
This translates into higher transportation, manufacturing and power generation costs, leading to an across the board rise in inflation in the country. Yet the sale of automobiles continues to rise fueled by a rapidly growing population demanding more. With extremely limited inflows and rapidly rising outflows, the high import based demand is likely to place further BOP pressures on the economy.
In part these increases have been necessitated due to a global rise in crude oil prices which have climbed to US$66.85 per barrel, translating into a 27 per cent rise in average price since 2017.
Average Annual OPEC Crude Oil Price
Gone are the days of low fuel prices. The people and government need to brace themselves for tougher times as the prices are expected to continue to rise. For Pakistan this is a particularly difficult time with growing fiscal gaps and falling forex reserves. The government has little room to maneuver and the easiest targets are the people of Pakistan who will continue to pay, without uttering so much as a whimper.