Pakistan's ministry of finance announced on Sunday petrol and diesel prices would rise by 35 rupees ($0.1400) a litre after the country's currency value plummeted this week when price caps were removed.
The decision came days before an International Monetary Fund mission will visit Pakistan later this month to discuss the stalled ninth review of the country's current funding programme, reports Reuters.
Last week, the Pakistani rupee lost close to 12 per cent of its value after the removal of price caps that were imposed by the government but which were opposed by the IMF.
Pakistan’s Finance Minister Ishaq Dar said at a press conference on Sunday he hoped the announcement would dispel speculation on social media of a higher price hike or that petrol supplies would run dry. He said the hike was recommended by oil and gas authorities due to the higher cost of buying energy in the global market.
"We will have to take the rise in international oil prices and the devaluation of the rupee into account," he said.
"This rise is being done immediately on the recommendation of the oil and gas regulatory authority who said there were reports of artificial shortages and hoarding of fuel in anticipation of price rises - hence this price rise is being done immediately to combat this."
The day before, witnesses reported some petrol stations had long lines outside as residents filled their tanks due to speculation that prices would soon rise.
Pakistan is in the midst of a balance of payments crisis and the plummeting value of the Pakistani rupee will push up the price of imported goods. Energy comprises a large part of Pakistan's import bill.