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Fuel Prices Expected to Drop in October: Relief for Consumers

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In some welcome news for consumers, the prices of high-speed diesel (HSD) and petrol are expected to see a notable decrease in the first half of October. After two months of continuous price increases, this potential reduction comes as a breath of fresh air for the pocketbooks of middle- and lower-middle-class individuals.

The last time we saw a price cut was in mid-July when petrol dropped by Rs9 per litre to Rs253, and diesel saw a reduction of Rs7 per litre to Rs253.50. Since then, the trend had been in the upward direction due to various factors, with the appreciation of the Pakistani rupee being a significant contributor.

For those who rely on petrol for their daily commute and transportation needs, the news is especially good. The expected decrease in petrol prices can be attributed to a 2% reduction in its international price, falling from $101 to $99 per barrel, coupled with the rise in the rupee’s value against the US dollar. Petrol is widely used in private transport, small vehicles, rickshaws, and motorcycles. So, this reduction will positively impact the budgets of many households.

As for high-speed diesel (HSD), the prices may decrease by Rs9-12 per litre if the government maintains the petroleum levy at Rs50 per litre. However, if there’s an increase in the levy by Rs5 per litre to meet budgetary targets, it could result in a smaller reduction of Rs5-8 per litre in diesel prices. This situation is a bit more complex because, unlike petrol, HSD’s international market price has actually risen by about $1 per barrel to $122 in recent weeks.

HSD is primarily used in heavy transport vehicles, buses, trains, and agricultural engines. Its price reduction could have a direct impact on the prices of essential commodities like vegetables, as transportation costs are a significant factor in determining the prices of such goods.

This price reduction opportunity is the first for the caretaker government, with petrol and HSD prices having increased significantly between August 15 and September 15. While the reduction in prices is a positive development, it remains to be seen how these prices will be affected in the coming months.

Currently, there is zero GST on all petroleum products, but the government imposes a Rs60 per litre petroleum development levy on petrol and Rs50 per litre on HSD and high-octane blending component. Additionally, there is about Rs22-23 per litre in customs duty on petrol and HSD. These additional charges play a crucial role in determining the final price that consumers pay at the pump.

In conclusion, the expected decrease in fuel prices, especially petrol, for the first half of October is a piece of good news for consumers. It will provide some relief to the budgets of middle- and lower-middle-class households who rely on these fuels for their daily transportation needs. However, the final prices will depend on several factors, including government policies and international market trends.

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