ne is familiar with different types of charges, surcharges and super surcharges, especially in the energy bills. Successive governments have been using these ‘charges’ effectively to raise revenue through indirect taxation, albeit with an inflationary impact.

We are once again witnessing a spike in inflation, but not due to a deliberate ‘extra surcharge.’ Inflation in Pakistan now carries a war charge. The Gulf War has added expensive fuel, expensive shipping, expensive insurance, uncertain supply chains and a larger dollar bill to our inflation calculus.

Oil is not priced like fruit in a local mandi. A fruit seller prices what he has bought and what he thinks customers will pay that day. An oil trader prices today’s barrel by looking at tomorrow’s risk. Can tankers pass safely? Will ports remain open? Will insurers raise charges? Will buyers in Asia rush to secure cargoes? Will a military strike close a route?

Every fear enters the price before the shortage reaches the street.

Pakistan has already felt that change and has secured clearance for two LNG cargoes from Qatar via Hormuz through its diplomatic engagements with Iran, Qatar and the US. This, in itself, is an indicator that securing energy has moved from routine business to crisis management.

The pump price in Pakistan does not follow the Brent crude point-for-point. Brent is priced in dollars. Pakistan sells petrol and diesel in rupees. Between the two lie the exchange rate, freight, insurance, port handling, refinery margins, oil marketing margins, dealer margins, taxes and the petroleum levy.

A global price movement is only one part of the local bill.

This is why a citizen may hear that global oil softened during the week and still pay more at the pump. The Pakistani rupee is relatively stable versus the US dollar. However, many other factors determine the pump price. Freight may have become dearer. Insurance may have risen because ships are entering a risky zone. Old cargoes may have been bought at higher prices. New cargoes may carry a war premium. On top of that, there are petroleum levies (PL).

The PL is neither a shipping nor a war charge. It is money collected by the state from each litre sold. When the government faces a tight budget and an IMF programme, it often protects this revenue. That decision may be fiscally useful, but it still raises the price paid by a motorcyclist, van driver, farmer or shopkeeper.

The latest fuel numbers show the scale of the shock.

Both petrol and high-speed diesel are around Rs 415 a litre as I write. Before disruptions in Hormuz, petrol sold for Rs 266.17 and diesel for Rs 280.86 a litre. Those figures explain why households feel that fuel prices have broken away from normal price movement.

Diesel will carry the sharpest inflationary effect. Petrol hurts the commuter first. Diesel moves the economy. Trucks carry wheat, vegetables, milk, poultry, medicine, cement and factory inputs. Buses carry workers. Tractors and tubewells support farms. Generators keep shops, clinics and small workshops open when utility power fails. A diesel price raise becomes a freight increase. A freight increase becomes a shop price increase.

The shopkeeper does not mention Hormuz while selling onions. The milkman does not discuss tanker insurance. The school van driver does not explain Brent futures. Each one of them changes the price because his own cost has changed. The consumer receives the whole chain in one bill.

Inflation data is already showing pressure.

The State Bank’s April 2026 inflation monitor recorded national CPI inflation at 10.9 percent, up from 7.3 percent in March. Wholesale inflation rose to 13.6 percent. The weekly Sensitive Price Indicator rose to 12.6 percent.

External factors also hit the trade account. More expensive fuel means more dollars leave the country for the same level of activity. Power producers, refineries and importers need financing. Banks become careful with letters of credit. Industry worries about energy supply. Businesses delay orders or raise prices to protect cash flow. Consumers then face higher costs and fewer discounts.

Citizens should expect a scattered price wave in the coming weeks.

Petrol pumps will feel the first hit. Food markets will feel the second wave. Perishable items get expensive before any festival like Eid. However, this time they will also get expensive because freight costs to transport them have increased. Vegetables, fruit, milk, eggs and poultry are exposed to fuel costs from farm to wholesale market to retail shop. Stored items may move later, when replacement stock arrives at higher freight and financing costs.

Services will carry the third wave. Restaurants will adjust menus. Delivery platforms will raise charges. Tailors, barbers, clinics, workshops and tuition centres will pass on electricity, generator fuel and transport costs. Small businesses do not have the balance sheets to absorb repeated fuel shocks. Many will raise prices in small steps to avoid losing customers at once.

Some traders will raise prices before their new stock arrives. They will say replacement stock will cost more. Some will be right. Some will use the moment to widen margins. Weak market enforcement allows both behaviours to look the same to the buyer. Hoarding in wheat, sugar or edible oil can turn a price shock into a supply scare.

Government communication should become more transparent. Every fuel price notice should show the imported product cost, exchange rate effect, freight, insurance, margins, taxes and petroleum levy. Citizens should know which part of the price came from war; which part came from the rupee; and which part came from our revenue needs.

Going one step further, the government should be able to explain why the additional revenue was required to ensure the continuous delivery of public services, including relief.

Relief should not be spread across every litre consumed in the country. Rich households consume more fuel than poor households. Broad cheap fuel benefits the largest users first. The government should continue with targeted relief for public transport, small farmers, motorcyclists and freight carriers transporting essential food and medicine.

It should also monitor the market to ensure that public transport and freight carriers are passing on that relief to people. Likewise, the provinces should monitor wholesale markets, not only retail stalls.

As the budget for the next fiscal year arrives, the wage earners will feel the gap because salaries do not adjust as quickly as diesel, rent, school vans and grocery bills. The government has done an excellent job in brokering a ceasefire—no matter how fragile—between the US and Iran. The next few weeks will not only test the durability of that ceasefire but also the household cash, market discipline and the state’s ability to tell citizens exactly what they are paying for.

The writer heads the Sustainable Development Policy Institute and is a member of the Asian Development Bank Institute’s Advisory Board. His LinkedIn handle is Abidsuleri.