Fuel price hike to have a negative impact on economy: Dhaka chamber

The increase in gas price in June and the fuel price hike on Saturday will have an immediate negative impact on transportation, essential commodities and electricity, said the Dhaka Chamber of Commerce and Industry (DCCI) today.

On Saturday, the government raised the price of diesel and kerosene by 42.5 per cent and petrol and octane by 51.1 per cent and 51.7 per cent respectively.

Diesel is the most-consumed fuel in Bangladesh, accounting for 73 per cent of the country's total fuel consumption. More than 90 per cent of the transportation sector is dependent on diesel.

Additionally, vehicles that are powered by octane and petrol will also have to bear an increased cost, said the chamber in a press release. 

"This will also push up the domestic freight costs and eventually will lead to higher prices of essentials across the country."

The government increased the price of all fuels despite the gradual fall in global energy prices in recent times, according to the DCCI.

The chamber feels that another major impact will be on the production cost of agricultural products as diesel is widely used for irrigation purposes.

"Recurring fuel and fertilizer price hikes will directly impact the production cost of agricultural products and gradually hamper food security and inflict further misery on public lives."

Manufacturing industries are already suffering due to electricity rationing as diesel and liquefied natural gas prices went high globally.

"However, this price hike of fuel, in addition to the recent price hike of natural gas, will have a domino effect on the entire economy," said the DCCI.

The cumulative impact of the price hike of fuel will cause inflationary pressure on the economy by raising the operating cost of all energy-dependent businesses and industries, the chamber warned.

It recommended austerity in consumption and reduction in the fuel price as soon as it comes down in the international market considering its negative impact on the economy.

On Thursday, oil prices dropped to their lowest levels since Russia's invasion of Ukraine in February this year as the possibility of an economic recession globally is growing.

Benchmark Brent crude futures settled down 2.75 per cent at $94.12, the lowest close since February 18, reported Reuters.