Fuel prices are prominent which gives the ropes of inflation. Inflation follows up stagflation which is upgraded form of inflation in which an economy experiences slow growth and youth sits by keeping hands over hands with no employment. This time many countries in the world are facing tight situation and economies are walking on tightrope.
[Disclaimer: This article will be written by considering the situation of inflation in Pakistan But overall inflation problem is global.]
Last night, on 15 August 2023 government announced another hike in the prices of fuel. It is like a massive burden on the shoulders of public.
[source ]
It's another massive hike in just fifteen days. Climbing prices of fuels are stoking inflation. The rich people are getting their place in the middle class because of this inflation. Hunger problems in many countries are also due to inflation.
Inflation is also because of corrupt politicians who always focuses over extracting money from people's tax. Government is extracting bags of wealth through taxation but we cannot see any improvement on the roads, industries, mills,energy sectors and on economy. Policy makers are not focusing to benefit the public. Instead of working for public they are providing comfort to political parties.
[Source]
The whole energy sector is collapsed. The only reason behind the collapse of energy sector is poor strategies of the government. This time there is transition between power and there is huge instability of politics. This instability is giving birth to many complications. Game of power has blinded the all politicians as they are fueled with rage. They just want to have hold on the main seat. In the race of power they have forgot to work for the public. Whenever, election's time arrives they try to convince public that they will live and die just for the public but always on media we always hear conspiracies.
Petrol prices reached to RS 290.45 per litre with an increase of 17.50 ruppees in prices. Similarly, diesel prices reached to 293.40 ruppees per litre with an increase of 20 ruppee in prices.
The ministry of finance announced that they have increased the prices of fuels because prices are increasing in the international market. Although, Diesel and petrol experienced the hike in prices but light diesel and kerosene oil remained firmed on the previous prices.
Within 15 days public is experiencing second time this kind of hike in the prices. Recently, just 15 days ago petrol and diesel prices hiked from previous prices. Records show that within just fifteen days fuel prices went up with 40 ruppee.
Diesel's high price will directly effect the public. Also Diesel is inflationary for the public. Because it is used in the most of heavy transport vehicles, trains and other engines which public uses in agricultural sector. For instance, tractors, tube wells, trucks, buses, threshers uses diesel. Moreover, this is the season of harvesting crops and farming. That's why it is like a bolt from blue for the public.
Diesel's prices also effect the vegetable's prices and thus it effects the overall market.
Similarly, Petrol's high price also affect the living standards of every citizen. Petrol is used in private vehicles like motorcycle, cars, small vehicles, rickshaws etc. In this way it effect the citizens.
Fuel prices also become reason to raising the fares of local transport. Middle class cannot afford private vehicles. That's why they prefer to travel through local bus services but fuel prices are effecting the local transport system.
Directly or indirectly, Hike in fuel prices is promoting the Inflation problem in the country.
According to Consumers price index, Inflation in pakistan in the month of june was 28.3 percent and in the month of june it touched the figure of 29.4 percent. Both are close but it is not as much as high of May month which was 38 percent which is higher among all.
If we compare the price of petrol with the previous year's petrol price then it is 24 percent higher in comparison to previous year. Moreover, if we compare the price of diesel with price of previous year then it is 35 percent higher.
The interesting twist is that, Overall there is no general sales tax on fuel. But in contrast to it government is charging from Rs 50 to Rs 55 as levy.
[Source]
In addition to charging levy prices government is also charging 18 to 22 ruppees as custom duty over petroleum and diesel.
In short, we can say that government is generating tonnes of wealth trough the fuel sector.
source
Inflation can affect both the rich and the poor, but its impact can vary based on their financial circumstances.