Petrol prices are directly correlated to inflationPakistan saw the highest rise in policy rate in 2018 in Asia; yet inflation has not been dented. Even during the tenure of the current government, that is September-March 2018/19, the same consequence was seen, whereby while rate was increased by 2.75 per cent, inflation rate could not be brought down as a whole, which increased by 4.3 per cent. Still the SBP has pursued monetary tightening- and government has not objected to this policy– whereby it increased policy rate by a half-a percentage-point in one go to 10.75 per cent. Hence, during May-July 2018 and then in March 2019, when the prices of petrol rose, the inflation rate also increased. This indicates the heavy bearing of changes in petrol prices on the overall inflation rate.

Source: Pakistan Today April 06, 2019 20:15 UTC