Pakistan, Fuel prices, Impact on Economy

Pakistan keeps petrol prices steady, slashes HSD by Rs 7 per litre


As of November 2023, the price of petrol stands at Rs281.34 per litre.

POLsOld PriceNew PricePrice Difference
High-Speed Diesel296.71289.71-7
Light Diesel180.45175.93-4.52
Source: pakobserver

Impacts of fuel prices change on economy of a developing country

  • Higher fuel prices can lead to increased costs for the production of goods and services, inflation, unemployment, reduced demand for products other than oil, lower capital investment, tax revenue decline, and budget deficits increase, driving up interest rates.
  • Higher costs of living, reduced household disposable income, and reduced spending in other areas (leisure, household goods, services) are also some of the impacts of higher fuel prices.
  • The impact of fuel prices on inflation is more significant in developing countries than in advanced economies.
  • The purchasing power of all households declines as fuel prices increase, but the distributional impact is progressive.

How can a government reduce inflation impact of higher fuel prices in common people?

Using alternative energy sources to control fuel-based inflation?

Options for the government to boost the economy while fuel prices are rising?

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