Welcome back from vacations: Going to school will cost more now as fares shoot up

August 1, 2018

Students returning from summer vacations will pay more to get to school this term because of a weaker rupee, which resulted in higher transportation costs in July. Food and petrol will also become more expensive in the coming months.

This is because the inflation rate for July was higher than analysts’ forecast of 5.5%. The major surge came from transportation and fuel, which make up 36.5% of the overall consumer price index (CPI).

The prices of common goods and services rose by 5.83% in July compared to July 2017, the Pakistan Bureau of Statistics reported on Wednesday. Devaluation of the rupee and an increase in international oil prices were the main reasons for higher prices of diesel, bus fares and petrol, which rose 41%, 48% and 33.5% respectively.

Analysts expect the inflation rate to be in the range of 6% to 8% this fiscal year and predict a further rise in the price of petrol and food in the next three months.

Since November 2017, the prices have been going up, mainly due to the devaluation of the rupee, which depreciated 22% in the same period. On July 14, the State Bank also raised its policy rate by 1% to 7.5% so it could contain inflation and prevent the economy from overheating.

The Oil and Gas Regulatory Authority also suggested that the interim government increase petrol and diesel prices by Rs3.5 per litre and Rs2.45 per litre respectively but the latter decided against it. The incoming PTI government can now decide to increase fuel prices.

Among food items, the price of tomatoes rose by 38% last month but daal mash and potato prices dropped by 26% and 22% respectively.

Since hitting a peak of Rs130 in July, the rupee has recovered significantly to Rs124 but international experts say the IMF may ask Pakistan to devalue the rupee even further if it seeks a bailout to improve the country’s dwindling dollar reserves.​