ISLAMABAD: In a move set to intensify pressure on households and businesses, the government has raised petrol and diesel prices by Rs26.77 per litre, triggering fresh inflation fears and adding to the burden of already strained consumers.

The sharp increase, effective immediately for the coming week, pushed petrol to Rs393.35 per litre and high speed diesel to Rs380.19. The surprise revision comes despite earlier expectations that fuel prices could decline, making the decision a major shock for the market.

Officials linked the increase to rising international oil prices amid regional tensions, but fiscal pressures and revenue commitments also appear to have shaped the decision. The hike comes as the government seeks to meet key economic targets ahead of an expected International Monetary Fund disbursement in May.

The impact is expected to ripple across the economy, particularly through diesel, widely seen as one of the most inflationary fuels due to its central role in transport and supply chains. Analysts warn the increase could push up food prices, freight costs and overall living expenses in the weeks ahead.

The latest revision also significantly raises the tax burden embedded in fuel prices, with the government now charging hefty levies on petroleum products to support revenue collection. Since late February, petrol and diesel prices have surged sharply following turmoil in global energy markets.

With fuel costs once again climbing, concerns are growing over another wave of inflation at a time when citizens are already facing rising utility bills and prolonged economic stress. The unexpected increase has reignited debate over energy pricing policies and their impact on ordinary consumers.