THE increase in fuel oil prices, driven by geopolitical tension in the Middle East and disruption in the Strait of Hormuz, may be explicable in a global context. Yet, their domestic consequences have already started proving severe and far-reaching. The government on April 18 raised prices of diesel, petrol, octane and kerosene by 15–18 per cent. The immediate fallout has been a sharp rise in transport fares and a visible strain on supply chains. Kitchen markets have started showing signs of shock, with the prices of essential goods climbing steadily. This is hardly surprising as fuel is a foundational input of the economy and any increase in price echoes through nearly all sectors. The consequences are evident in reduced bus services, arbitrary fare increase and disruption in the wholesale market. The simultaneous rise in prices of liquefied petroleum gas has compounded household distress. The price of a 12kg cylinder has been increased to Tk 1,940 from Tk 1,341 in two steps in April. But, it sells for higher prices because of weak enforcement. For ordinary citizens, the combined shock is both immediate and unavoidable.
The deeper concern lies in the broad macroeconomic and social impact. With inflation already hovering around 9 per cent and wage growth failing to keep pace, low- and fixed-income groups are set to bear the brunt of this escalation. Each increase in energy costs sets off a chain reaction, pushing up prices of food and the cost of transport and basic services, thereby forcing households into painful trade-offs between essential needs such as nutrition, health care and education. For many families already operating at the margins, even a modest rise in daily expenses can tip the balance into financial insecurity. Small businesses, too, face mounting operational costs, which they often pass on to consumers, further fuelling inflationary pressure. The burden of global volatility thus appears to have been disproportionately shifted onto consumers, with little cushioning against the shock. According to World Bank projections, the ongoing tension could push an additional 1.2 million people into poverty, adding to an estimated 36 million already below the threshold. In such a context, the price increase can deepen inequalities. What is especially troubling is the apparent absence of credible mitigation measures. There has been little indication of efforts to expand targeted support, strengthen social protection systems or ensure effective market oversight at a time when such interventions are most needed.
The government must, therefore, act decisively to mitigate the impact. A strict market oversight is essential to prevent unjustified fare and price increase. At the same time, social safety net programmes must be strengthened and expanded to protect low-income households from shocks. Without credible and effective intervention, the inflationary pressure will worsen economic vulnerability of millions.
