Fuel hike ripples across economy

For millions of households already struggling to cope with high living costs, the Tk 20-a-litre increase in fuel prices has brought a fresh financial burden, with commuters, drivers, farmers and small businesses facing higher expenses almost immediately.

The sharp increase, which took effect at midnight on Sunday, has already pushed up transport fares on several routes, while the higher cost of moving people and goods is expected to feed through to food, agricultural products, manufactured goods and other essentials.

The government raised the price of diesel to Tk 135 a litre from Tk 115, kerosene to Tk 155 from Tk 135, petrol to Tk 160 from Tk 140 and octane to Tk 165 from Tk 145. The increases range from 13.8 per cent for octane to 17.4 per cent for diesel.

The impact was felt on roads within hours of the new prices coming into effect.

Local buses and legunas in Dhaka began charging higher fares, with increases of around Tk 5 to Tk 10 reported on some routes.

The fare for a leguna trip from Chittagong Road to Jatrabari, for example, rose from Tk 20 to Tk 25, while fares previously set at Tk 25 increased to Tk 30.

Long-distance bus operators on southern routes from Dhaka to Khulna, Barishal, Satkhira, Bagerhat and Pirojpur raised fares by Tk 50 per passenger. Some buses travelling towards Chattogram were charging up to Tk 100 more.

Transport owners justified the increases by pointing to higher operating costs, saying a round trip between Dhaka and Khulna requires about 140 litres of fuel.

Truck and pickup operators have also announced fare increases of Tk 1,000 to Tk 2,000 per trip, adding to the cost of transporting essential commodities and other goods.

For low-paid workers and daily commuters, even a modest rise in travel expenses can translate into a significant monthly burden, particularly when food and other household costs remain elevated.

Ride-sharing and motorcycle users are also facing direct pressure as petrol and octane prices rise. Drivers dependent on their vehicles for their livelihoods now face a difficult choice between absorbing the additional fuel cost and passing it on to passengers.

Abul Hossain, a ride-sharing driver who supports a family of five, said his daily income was already barely sufficient to meet basic expenses such as food and clothing. He fears that the fuel price increase could encourage people to reduce their use of ride-sharing services.

The higher cost of freight is also expected to affect retailers and consumers, as diesel-powered trucks and pickups are essential for moving food, agricultural produce and manufactured goods across the country.

Farmers are particularly vulnerable to the diesel price increase. Around 70 per cent of irrigation pumps in the country operate on diesel, while irrigation accounts for 20 to 25 per cent of the total cost of Boro rice production.

Economists and business leaders have warned that the increase could therefore have broader implications for inflation, production and employment.

Anwar-Ul Alam Chowdhury Parvez, president of the Bangladesh Chamber of Industries, said the higher fuel price would increase industrial and transport costs at a time when businesses were already facing high inflation and inadequate supplies of gas and electricity.

He warned that rising costs could force some companies to reduce their operations, potentially resulting in job losses and a further increase in non-performing bank loans.

Shams Mahmud, president of the Bangladesh-Thai Chamber of Commerce and Industry, said the fuel price increase would add to the cost of doing business, particularly for export-oriented industries already facing competitiveness challenges.

“Additional pressure would affect manufacturing, logistics, agriculture, services and fast-moving consumer goods, while higher domestic inflation would reduce disposable income,” he said.

Government cites BPC losses
The government has defended the decision as necessary to contain mounting losses at the Bangladesh Petroleum Corporation (BPC).

Addressing public concern over the increase, State Minister for Power, Energy and Mineral Resources Anindy Islam Amit expressed regret over the hardship caused to citizens, describing the decision as unavoidable.

He said the BPC had incurred losses of Tk 22,875 crore between March and August amid tensions in the Middle East, higher shipping costs and increased insurance premiums.

The government expects the latest price adjustment to reduce BPC’s annual losses by around Tk 10,000 crore.

The state minister also said the increase was necessary to discourage cross-border fuel smuggling, as fuel prices in neighbouring countries are higher.

At the same time, he said the government was continuing to provide a subsidy of Tk 70 per litre on diesel and planned to introduce monthly family assistance cards worth Tk 2,500 for vulnerable households.

Despite the increase, the government maintains that consumers are still not paying the full import-linked cost of diesel.

The timing of the domestic price increase has also drawn attention, as international crude oil prices fell by more than 2 per cent on the same day. Brent crude dropped to $101.71 a barrel amid hopes of diplomatic progress in the Middle East.

The Passenger Welfare Association of Bangladesh has demanded that the previous fuel prices be restored, arguing that the increase would raise transport and commodity prices and place further pressure on already strained household budgets.

With transport operators already adjusting fares and higher freight costs likely to spread through supply chains, the immediate concern for consumers is that the fuel price shock could translate into another round of increases in everyday expenses.