UK Petrol Prices

Pakistan raised fuel prices by approximately 12 per cent on Wednesday, reflecting a rebound in global crude prices and prompting protests from consumers.

"This raise was essentially in line with global trends. We have to keep up with global prices," said an official from the ministry of petroleum in Islamabad.

The move has revived public criticism of conditions tied to a US$7.6b international monetary fund (IMF) loan to stave off a debt crisis in Pakistan which included a condition to remove government subsidies on energy.

"We have no sovereignty left as a country. Our policies are dictated by the IMF," said Waseem Akhtar, an Islamabad shopkeeper. "I sold my car last year because the petrol was becoming expensive and I ended up buying a motorcycle. Thanks to the IMF, I will probably now be forced to use a bicycle".

Chaudhary Saeed, a greengrocer, warned that inflation which has been falling in the past few months "will now shoot up".

"Who in their right mind will keep prices of essential commodities unchanged after this cruel oil price increase. All consumers will not suffer as a result (of the oil price increase)," he said.

The new financial year which began on Tuesday will see the government collect a "carbon tax" on the sale of different types of fuels.

Asim Hussain, the prime minister's adviser on petroleum, said the government expects to raise up to Rps120b ($1.5b) through the carbon tax in the new financial year. This is slightly below Rps129b ($1.61b) that it expects to have earned from a now-abolished petroleum development levy, during the last financial year which ended on Tuesday.

Economists warned, the oil price increase was likely to discourage government efforts to curb inflation.

The government expects the average annual inflation rate to drop to around 21 per cent for the last financial year (July 2008-June 2009) while it expects the inflation rate to fall to below 10 per cent in its new financial year.

"It is already clear that if oil prices continue to rise as we go forward, attempts to tame inflation will suffer very badly" said one western economist in Islamabad.