In a move that will impact households across the country, the Oil and Gas Regulatory Authority (OGRA) has announced an increase in the price of liquefied petroleum gas (LPG) for September 2024. This adjustment sees the price of LPG rising by Rs. 6.99 per kilogram, bringing the cost of an 11.8 kg domestic cylinder to Rs. 2,879.1, up from Rs. 2,796.5 in August.
LPG Price Hike: The Numbers
The new price hike means that consumers will now pay Rs. 243.99 per kilogram of LPG, reflecting a significant increase from the previous month. This price adjustment translates into an additional cost of Rs. 82.5 per domestic cylinder for households that rely on LPG for cooking and heating. With the new price set for September, many families will need to adjust their budgets to accommodate the increased cost.
Why the Increase?
The pricing of LPG in Pakistan is closely tied to international benchmarks, particularly the Saudi Aramco Contract Price (CP) and fluctuations in the US Dollar exchange rate. For September, OGRA cited a 3.7 percent increase in the Saudi Aramco-CP as a key factor driving the price hike. Additionally, the average exchange rate of the US Dollar against the Pakistani Rupee saw a slight increase of 0.046 percent, further contributing to the rise in LPG prices.
The adjustment in LPG prices is not an isolated event but rather a reflection of global market trends. The increase in the Saudi Aramco-CP indicates a rise in the cost of LPG production, which is passed on to consumers. The exchange rate fluctuation adds another layer of complexity, as a weaker Rupee makes imports more expensive, thereby affecting domestic prices.
Impact on Households
The increase in LPG prices is likely to have a noticeable impact on households, particularly those in rural and remote areas where LPG is often the primary source of energy for cooking and heating. With the cost of an 11.8 kg cylinder now nearing Rs. 2,900, families may find themselves spending a larger portion of their income on energy. This price hike may also lead to a rise in inflationary pressures, as the increased cost of energy often translates into higher prices for goods and services.
For many low-income families, the rising cost of LPG could mean making difficult choices between essential needs. The increase may also spur some households to seek alternative, less expensive energy sources, although options are limited in many parts of the country.
The Broader Economic Context
This latest increase in LPG prices comes amid broader economic challenges facing Pakistan, including rising inflation and currency depreciation. The interplay between global energy prices and the domestic economy is becoming increasingly evident, with changes in international markets having a direct impact on Pakistani consumers.
Energy costs are a significant component of household expenses, and any increase can have ripple effects throughout the economy. As businesses also face higher energy costs, these increases may be passed on to consumers in the form of higher prices for goods and services, further straining household budgets.
What’s Next?
With the current trend in global LPG prices and the ongoing volatility in the exchange rate, it remains to be seen how the prices will adjust in the coming months. Consumers will be closely watching any announcements from OGRA and other regulatory bodies regarding future price changes.
For now, households must brace for the increased cost in September and consider strategies to manage their energy consumption more efficiently. Whether through reducing usage, seeking out alternative energy sources, or adjusting household budgets, families will need to navigate the challenges posed by the rising cost of LPG.
