The government has announced an increase of prices of petroleum products by Rs 10 to Rs 12 per litre due to an increase in the international oil prices and the front-loaded policies proposed by the International Monetary Fund (IMF). The increase in the petrol prices is the highest recorded increase in one go.
The decision to increase the price of petroleum products came after the prime minister agreed to abide by the obligations set by the IMF to raise the levy on all petroleum products. The General Sales Tax (GST) on all these products has been kept unchanged at zero. In the international market, the benchmark for crude oil has increased by 3%, taking the price of one barrel to 95 USD during the last fortnight.
Since Pakistan imports its stock of petrol from the middle east, the hike in petrol prices has triggered inflation in the economy. The cost of logistics and transportation are primarily affected as a result of inflation in petrol prices. This is followed by the cost of construction of residential and commercial projects. With prices soaring, property affordability becomes a rising concern in the real estate sector. Although the sector has observed stellar growth in a short period, the inflationary trend can lead to an increase in the prices of construction materials like bricks, steel bars, and cement. Consequently, this can lead to delays and abandonment of projects, putting stress on the overall supply in the property market.
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