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As inflationary pressures continue to weigh on households and industries, a glimmer of relief may be on the horizon for consumers. The federal government has a window of opportunity to slash petrol and diesel prices in its next fortnightly petroleum price review, according to a recent analysis by Arif Habib Limited (AHL), a leading brokerage and research house.
Petrol Price May Drop by Rs. 6.82 Per Liter
According to estimates shared by AHL, the government has enough fiscal flexibility to cut the price of petrol by Rs. 6.82 per liter. If this recommendation is implemented, the new petrol price will come down to Rs. 265.33 per liter from the current Rs. 272.15 per liter.
The estimate comes after weeks of back-to-back increases that drove fuel costs to uncomfortable highs for both commercial and domestic users.
Diesel Price Cut Also Expected
In addition to petrol, high-speed diesel (HSD) is also expected to see a price reduction of Rs. 1.68 per liter, bringing it down from the existing Rs. 284.35 to Rs. 282.67 per liter. Though the decrease in diesel is not as steep as petrol, it could still offer some relief to sectors heavily dependent on diesel, such as transportation, agriculture, and logistics.
Fuel Prices Have Increased Sharply Since June
The current hike in fuel prices is part of a broader trend. On June 1, 2025, petrol was priced at Rs. 253.63 per liter, while diesel was being sold at Rs. 254.64 per liter. Since then, prices have risen multiple times, pushing petrol to Rs. 272.15, a jump of Rs. 18.52 per liter in less than two months.
This sharp increase has had a cascading impact on the cost of goods, inflation, and public transport fares, further burdening the average Pakistani citizen.
Govt Cuts Profit Rates on National Savings Schemes
Why the Government Can Now Reduce Prices
There are several reasons why the government may now have room to cut fuel prices:
- Global Oil Prices: International crude oil prices have seen minor corrections in recent days, easing import costs for Pakistan.
- Stable Exchange Rate: The Pakistani rupee has shown relative stability against the US dollar, which also reduces pressure on fuel import bills.
- Lower Freight and Premium Costs: Shipment costs and international premiums on refined petroleum products have dropped slightly, making imports cheaper.
These macroeconomic factors provide space for price adjustments without compromising the petroleum levy or revenue targets.
Impact on Inflation and Economy
Fuel prices are a critical determinant of inflation in Pakistan. A reduction in petrol and diesel prices can significantly affect the overall Consumer Price Index (CPI). Lower transportation and production costs can help reduce the prices of essential goods, thus offering short-term relief to consumers.
Moreover, this can boost agriculture and industrial output, sectors that heavily rely on diesel. It may also help the government restore some public trust amid ongoing economic challenges.
Final Decision Rests with the Government and OGRA
While the analysis by Arif Habib Limited offers hopeful projections, the final decision on fuel prices will be made by the Oil and Gas Regulatory Authority (OGRA) in coordination with the Ministry of Finance and the Petroleum Division. The new prices will be announced before the start of the next fortnight, based on updated import costs, exchange rates, and global oil prices.
Public Expectations Are High
Amid ongoing inflation and rising utility bills, the public eagerly awaits any measure that can provide economic relief. Many are hopeful that the government will pass on the benefit of reduced import costs to the people instead of maintaining higher levies for revenue generation.
If the expected fuel price cut materializes, it would be the first reduction in recent months and could be a politically favorable move for the government.
Conclusion
With the next review just days away, all eyes are on OGRA and the federal government. A reduction in petrol and diesel prices—no matter how marginal—can send a strong signal that the administration is responsive to the economic strain felt by ordinary citizens. However, whether or not the government follows through on the suggestion remains to be seen.
