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Consumers brace for paying more in Ramazan

July 01, 2013

KARACHI, June 30: Consumers may find it hard to manage their household budget for essential items in view of an expected pre-Ramazan price jump triggered by increases in petroleum product prices and the general sales tax (GST) with other taxation measures announced in the federal budget.

The Oil and Gas Regulatory Authority (Ogra) on Friday had recommended to the government to increase the price of petrol and diesel by Rs2.66 and Rs3.66 per litre, respectively, from July 1. But the government finally on Sunday raised the diesel price by over Rs2 per litre and petrol by Rs2 per litre.

The government had also increased the GST on the sale of compressed natural gas by nine per cent which raised the retail price of the CNG. This decision would also jack up the prices of commodities as many transporters operating light commercial vehicles are using CNG. Consequently, transporters and goods carriers would charge higher fares from manufacturing units and market players who would definitely recover extra transport cost from consumers’ pockets by raising the prices.

“I am initially anticipating an impact of Rs1 to Rs1.50 per kg on wholesale commodity prices such as sugar, wheat, wheat flour, rice, pulses, etc as diesel price moves up by over Rs2 per litre,” said Anis Majeed, chairman of the Karachi Wholesalers Grocers Association, and added that the impact of diesel hike might have a far-reaching impact since it would trickle down to the retail price stage.

He expressed surprise over the PML-N government’s departure from its promise of bringing down commodity prices. “While failing to provide any relief, the government should have at least avoided taking such steps ahead of the holy month which will trigger food inflation,” he said.

However, Mr Majeed foresees a big relief in the cost of gram pulse and kabuli channa (white gram) whose prices had crashed to Rs70 and Rs75 per kg this year from around Rs100 per kg each last year. He said that kabuli channa was arriving from India where its price was lower and importers were benefiting from the devaluation of the Indian rupee.

Excluding gram pulse and kabuli channa, he foresaw a tough Ramazan for consumers this year in view of price hike on account of various budgetary measures followed by an increase in petroleum product prices.

Vegetables prices

Four days ago people were buying tomatoes at Rs120 to Rs130 per kg and now its price has fallen to Rs100 per kg. Onion and potato are now available at Rs35 to Rs40 per kg and Rs20 to Rs25 per kg, respectively.

President of the Falahi Anjuman Wholesale Vegetable Market Haji Shahjahan fears a jump of Rs2 to Rs3 per kg in vegetable prices at the retail level if the government raised diesel price by over Rs2 per litre. “Wholesale tomato price jumped to Rs60 to Rs65 from Rs45 to Rs50 per kg. Consumers had to pay Rs120 to Rs130 per kg two days ago as supply from Balochistan came to a halt which later resumed. Price of tomato may remain under pressure as Karachi is consuming tomato from Balochistan, and Khbyer Pakhtunkhwa production is fulfilling the requirement of Punjab. Imports of tomato from India have also been suspended for the last 10 days,” he said.

Karachi is consuming onion arriving from the Balochistan crop and causing a drop in wholesale price to Rs20 to Rs25 per kg from Rs30 to Rs35 per kg. Onion crop from Sindh will arrive in October. Potato is being delivered to the Karachi markets from cold storages and its wholesale price hovers from Rs14 to Rs15 per kg while in retail it sells between Rs20 and Rs25 per kg.

Mr Shahjahan urged the government to put on hold the price hike in petroleum products as its impact would be devastating on consumers who would also feel the pinch of various decisions taken in the federal budget.

Ghee/cooking oil may cost more

As in the past market players usually increase prices before Ramazan to put extra pressure on the price regulator in fixing the prices according to their aspiration. Many companies also raise the prices and then they offer price discount on Ramazan especially in ghee/cooking oil which certainly cannot be termed a Ramazan relief.

General Secretary of the Karachi Retail Grocers Group Farid Qureshi said that so far the manufacturers of packed items had not passed the one per cent hike in the GST but consumers would have to bear the burden from July 1 onwards. “Price increase may be more than one per cent due to an increase in diesel prices, changes in other taxes and duties, rise in power tariff, two per cent GST on non-registered buyers,” Mr Qureshi added.

Items such as flour, wheat, pulses, sugar, poultry, fresh milk, rice etc do not fall under the GST but ghee and cooking oil could cost more followed by all packed items, he added.

Milk, poultry and flour already high

In other items where the GST does not exist, stakeholders have already played havoc with prices of wheat flour varieties, fresh milk, yogurt, poultry and its meat due to lack of any serious efforts. Even though a number of retailers and shopkeepers of milk and poultry are being fined and sent to jail, consumers say they fail to see any positive outcome coming from the crackdown on market players by the Karachi commissioner.

Poultry live bird and its meat continue to sell at Rs200 and Rs320 to Rs350 per kg, respectively, instead of their official price fixed at Rs165 and Rs272 per kg. Consumers paid a record high price at Rs210 to Rs230 per kg for live bird and Rs360 to Rs380 per kg for its meat in the third week of June.

Fresh milk is also showing no decrease from the current rate of Rs80 per litre. Surprisingly, when its rate was fixed at 70 per litre it was selling at Rs75.

Flour millers have already become active in the last one and a half months in increasing the rates. Fine flour now sells at Rs42 per kg as compared to Rs36 per kg, atta no 2.5 now sells at Rs41 per kg when earlier it was selling at Rs35 per kg and chakki flour now sells between Rs42 and Rs44 per kg as compared to Rs38 per kg.

Commissioner’s warning

Karachi Commissioner Shoaib Ahmed Siddiqui warned profiteers of launching an aggressive price-checking campaign this year despite a staff shortage.

Though the only 26-28 senior officials were not enough to curb overcharging by retailers in 18 towns of the city, he was confident that good results with that strength were possible. “There should be at least one official in every area to check profiteering,” he said. He also added that he had asked consumer societies to play their active role in that regard.

When asked that poultry and fresh milk rates had not come down despite daily crackdowns, he said: “The officials assigned to check overcharging are producing results and will continue giving tough time to shopkeepers/ retailers till they start selling commodities at the official rate.”

As many as 2,141 retailers/shopkeepers of poultry and fresh milk were penalised with challans and a fine of over Rs3 million had been realised from them. Moreover, 46 people had been sent to jail since June 1, he added.