Economy
 
Post-budget impact: Some basic necessities prices decline
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June 15, 2012
Post-budget decline of up to Rs 4 per kilogramme (kg) in prices of cooking oil and ghee in the wholesale and retail markets of Karachi has provided immense financial relief for overwhelming segment of the population already reeling under the never-ending spell of rise in prices of essential commodities.

It may be recalled here that the higher rates of one of the most essential kitchen items during the last few months spurred by higher rates of government taxes and increasing prices of palm oil in the international market had caused hardships to consumers compelling them to buy both items at exorbitant prices during the current months.

Previously, prices of different brands of ghee and cooking oil stood at around Rs 190 per kg to Rs 200 per kg in the open market making it virtually impossible for the poor segment of the population to make their desired purchasing of both items as per their daily kitchen requirements.

But with the declining trend of palm oil in the international market as witnessed during the last fortnight and recent announcement by the federal finance minister during the unveiling of the annual budget for the next fiscal year 2012-13 to abolish sales tax and bring down ratio of federal taxes on ghee and cooking had salutary impact on their prices witnessed during the last few days in the retail market.

Some leading retailers of ghee and cooking oil informed the scribe that their rates have gone down with a ratio of Rs 4 per kg and Rs 3.50 per kg, respectively during the last many days spelling immense financial relief to the general consumers.

The declining tendency in ghee and cooking oil in the local market has not only been providing relief to consumers but also pushed its demand at the retail level as claimed by leading retailers of the city.

Karachi Retailer and Grocer Group General Secretary Fareed Qureshi responding to a number of questions of the scribe attributed the decline in prices of both items owing to generous attitude of the federal government, which announced relaxation in federal duties helping largely to bring down their price to a reasonable level acceptable to consumers considerably.

The steep rise in ghee and cooking oil rates in the retail markets during the last few months had a devastating impact on its demand as a majority of consumers sharply reduce their daily demand having an adverse impact on the overall trade of an overwhelming majority of retailers.

He did not rule out further decline in prices of both items keeping in view the fast approaching holy month of Ramazan, which is hardly 35 to 40 days away. This latest decline would not only facilitate consumers of both items, but would also have a positive impact on daily sales of retailers as well.

Tea price has registered a Rs 50 a kilogram decline in the domestic market after the reduction of sales tax from 16 to 6 percent in the Budget 2012-13.

The chairman of Pakistan Tea Association Hanif Jano said that tea prices are expected to fall further due to the 10 percent reduction in sales tax as well as the stoppage of import under the Afghan Transit Trade.

He said that prices of best quality Kenyan tea in the wholesale market has come down from Rs 450 per kilo to Rs 400 a kilo. He said that soon the prices of branded tea would also decrease substantially.

However, before budget the prices of major basic necessities increased manifold created hardships for the masses.

According to a survey conducted by the scribe, huge difference was observed in last year’s and the current prices of essential goods, including milk, ghee, pulses, meat, and found that the prices of almost everything had been increased manifold and it appeared that the government sits idle while the multinational and local companies pocketed huge profits.

Fareed said that before budget the prices of commodities had shown a record increase in the four years tenure of the PPP-led government. The buyers did not have extra money to make any surplus pre-budget purchases as they had to meet other running expenses such as paying utility bills and rising transportation charges, he added.

He said the rupee devaluation against dollar and high global oil prices had caused a negative impact on domestic prices of commodities but the government had never checked whether manufacturers were really passing the impact of currency and oil as per increase or they were making price increases in view of demand and supply situation.


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