ISLAMABAD:
The federal government has announced yet another increase in fuel prices, effective from June 16, 2025, raising the price of petrol by Rs4.80 per litre and high-speed diesel (HSD) by Rs7.95 per litre. The revision comes as part of the government’s fortnightly fuel pricing mechanism aligned with global oil market fluctuations and fiscal obligations under the International Monetary Fund (IMF) programme.
Revised Fuel Prices
According to a notification issued by the Finance Division, the new prices are:
- Petrol:43 per litre (up from Rs253.63)
- High-Speed Diesel (HSD):59 per litre (up from Rs254.64)
These rates will remain effective until the next price review at the end of June.
Government Justification
The statement cited recommendations by the Oil and Gas Regulatory Authority (OGRA) as the basis for the increase. The revisions, it stated, reflect prevailing trends in the international oil market and the impact of exchange rate fluctuations.
Additionally, the government is preparing to impose a carbon levy of Rs2.50 per litre on both petrol and diesel starting July 1, 2025, as part of commitments made under the ongoing IMF loan programme.
Inflationary Impact Expected
The fuel price hike is expected to have a cascading effect on inflation, particularly due to the increase in diesel rates, which will raise the cost of goods transportation and agricultural operations. Petrol price increases will directly affect middle- and lower-income consumers, especially daily commuters and small vehicle owners.
Analysts warn that without adequate relief measures, the rising fuel prices may further burden households already strained by elevated utility tariffs, food inflation, and stagnant real incomes.
Fiscal and Environmental Outlook
While the carbon levy is aimed at strengthening fiscal revenues and promoting environmentally sustainable practices, critics argue that the timing—amid rising inflation and economic uncertainty—could heighten public frustration and limit consumer spending.
Government officials maintain that the pricing mechanism ensures transparency and protects against abrupt market disruptions. A senior Finance Ministry official added that fuel price adjustments will continue to follow a transparent formula based on international benchmarks.
Public Response and Next Steps
Trade unions and consumer rights groups have urged the government to consider targeted subsidies or transport cost adjustments to buffer the impact on vulnerable segments of society.
The next fuel price revision is scheduled for June 30, 2025, and will likely incorporate the additional carbon levy as part of the government’s fiscal roadmap under the upcoming federal budget.
Editorial Note:
The government’s decision to increase fuel prices underscores the tightrope it walks between fiscal consolidation and public affordability. As the country moves deeper into IMF-backed reforms, policy decisions must strike a balance between economic recovery and social equity.
Published by PakTribune Business Desk.