In an unprecedented move, the government on Thursday raised the prices of all kinds of fuel – twice in 49 days – by Taka 5 per litre apparently in a bid to ease the balance of payment pressure which has been threatening macro-economic stability.
Due to the decision made effective from Thursday midnight, the prices of petrol will be TK 91 from TK 86, price of octane will be TK 94 from TK 89, prices of diesel will be TK 61 from TK 56, prices of kerosene will be TK 61 from TK 56 and prices of furnace oil will be TK 60 from TK 55. “The decision was taken in view of substantial rise in the prices of fuel in the international market,” a government handout issued late Thursday night said announcing the sudden raises.
Economists believe that the rise of fuel prices will trim the country’s subsidy burden but put more pressure on persistently high inflation as fuel prices would definitely jack up the prices of essentials.
Country’s point-to-point inflation rate increased to 11.58 per cent in November, which is .16% higher than previous month (11.42%).
“The hike of fuel-oil prices would further fuel the on-going upward inflation in the country’s economy pushing the fixed and lower to middle income groups into misery,” Professor Abu Ahmed of Dhaka University told The Independent. He apprehended that the series of price hikes of fuel-oil would have a long-term adverse effect on industrial production, employment and living standard of a large section of people.
Economist Professor Anu Mohammad said that majority of the population would substantially lose their purchasing power due to the price hike of fuel and they would have to compromise their living standard. He assessed around 95 per cent people would be affected due to the series of fuel price hike by Tk 10 a litter in two slabs in less than two months.
A number of small and medium industries might be laid off as a result of having to lose their competitiveness due to abrupt increase in production cost for hike in fuel prices, he said. Zakir Hossain, executive director of the Development Synergy Institute said that the decision of raising fuel price was made at a time when there was a high inflation in the economy. People with fixed income will particularly bear the brunt of this move, he added. During the previous price hike of fuels in November 10 by TK 5 per litre, officials claimed that despite that rise, government would have to pay a subsidy amounting to TK 16.34, TK 14.84 and TK 4.95 against the sales of per litre of diesel, kerosene and furnace oil respectively. Earlier on September 18 and in May government raised the fuel prices. After the previous price hike in November, BPC officials said that after the price adjustment, BPC would face about Tk 100 million in operating loss.
-With The Independent input
