The economic consequences of the US-Iran conflict are not confined to the Middle East alone. Countries like Pakistan are feeling its impact, particularly through rising fuel prices and increasing transportation costs that are now translating into a wave of inflation. At a time when common man was already struggling with high living costs, the latest surge in prices has further squeezed household budgets and deepened public anxiety.
The latest figures paint a worrying picture. Inflation rose sharply by 14.52 per cent year-on-year for the week ending May 14, while weekly inflation also continued its upward march. Fuel prices have triggered a chain reaction, pushing up transportation and freight costs, which eventually affect prices of essential commodities consumed daily by general public. We recognise that government did attempt to provide some relief through a Rs129 billion fuel subsidy package aimed at supporting low-income groups, especially motorcyclists and transporters. The initiative was a welcome step and reflected an understanding of the hardships being faced by the public. However, scale of inflationary pressures suggests that the relief has not proven sufficient. When fuel prices continue to rise sharply, the benefits of targeted subsidies are quickly eroded by increases in food prices, transport fares and utility costs. There is no denying that government is operating under constraints of the IMF programme and remains obligated to meet difficult fiscal and revenue targets. However, balancing macroeconomic commitments should not come at the expense of unbearable pressure on common man. Instead of burdening the public through higher petroleum prices and indirect taxation, the authorities must focus on strict enforcement and improved governance to achieve revenue collection targets. Leakages, tax evasion and weak enforcement continue to deprive national exchequer of substantial revenues that could otherwise reduce the need for excessive taxation on fuel. In the current situation, reducing petroleum levy has become increasingly necessary. Petroleum products directly influence transportation, agriculture, manufacturing and almost every segment of the economy. Any reduction in the levy would provide immediate relief to consumers and create a ripple effect across the market by lowering transportation and production costs. This, in turn, would help bring down prices of essential commodities and ease inflationary pressures on lower and middle-income households. At a time of global uncertainty and regional instability, protecting people from excessive economic hardship should remain a central priority. Sustainable fiscal management is important, but so is ensuring that burden of adjustment is shared fairly rather than placed disproportionately on ordinary people already struggling to make ends meet.
