Bangladesh’s latest fuel price hike is likely to fuel inflation, reduce real household purchasing power and weaken consumption, particularly among price-sensitive households, according to BRAC EPL Stock Brokerage Ltd.
The government raised the prices of diesel, kerosene, petrol and octane by Tk20 per liter from September 21. Diesel, widely used in freight transport, public transportation and irrigation, saw the largest percentage increase at 17.4%.
In a special brief, BRAC EPL said higher fuel costs would initially raise transport, irrigation and distribution expenses, with second-round effects likely to spread to food, services and wage expectations. Higher logistics and input costs could also squeeze corporate margins, production and capacity utilization.
The brokerage said the adjustment could, however, reduce Bangladesh Petroleum Corporation’s losses and government financing needs.
BPC reportedly incurred Tk22,875 crore in losses between March and August amid elevated international fuel and freight costs.
