KARACHI: The imported used clothes market in the country is expanding despite the government’s claim of easing of inflation.
The expansion in this market segment indicates rising poverty owing to a fall in the purchasing power of consumers due to rising inflation or falling income levels.
Imports of second-hand clothes were 353,831 tonnes ($128.6 million) in 2010-11 when the average inflation, based on Consumer Price Index (CPI), was 13.7 per cent. In 2011-12, the CPI was 11pc but imports rose to 403,059 tonnes ($148m) and in 2012-13, the inflation stood at 7.4pc but imports touched 375,248 tonnes ($146m).
“The indicators do not add up. Either the data fails to project the real picture or the consumer behaviour has been tempered,” remarked a market expert.
As per the Pakistan Bureau of Statistics figures, worn clothing imports in July-December 2013-2014 slightly went up to 219,976 tonnes ($88m) from 198,720 tonnes ($76m) in same period last fiscal year.
The CPI figure of July-December 2013 is not available but December 2013 CPI alone stood higher at 9.2pc as compared to 7.9pc in December 2012.
The above figures suggest that more new low and middle income group people, failing to afford high cost of living, are adding to the list of used item buyers every year despite easing of food and non food inflation in the last few years as per government’s data.
“In the last three to four years, people who were hesitant in purchasing used clothes and other items, have now become regular customers,” Muhammad Usman Farooqui, General Secretary, Pakistan Second-Hand Clothing Merchants Association (PSHCMA) said.
He added that many used item buyers feel that this is still the best available cheaper option in view of un-affordability issue for brand new items.
He said increased taxes and duties introduced in the Budget 2013-2014 coupled with devaluation of the rupee against the dollar has pushed up the cost of imports resulting in retail price hike by 20-30pc in items like clothes, jackets, children garments, shoes, pants, etc. One US dollar was equal to Rs98.5 in July 2013 as compared to current rate of Rs106.
The cumulative duties and taxes on worn clothing and other worn articles come to over 19pc which includes 5pc general sales tax (GST), 3pc additional sales tax, 5.5pc income tax and 5pc customs duty.
Prior to Budget 2013-2014, there was 4pc GST, 2pc income tax and 5pc customs duty. Farooqui said that the government is more interested in getting higher revenues through ‘the poor man’s clothing rather than providing any relief’.
Many buyers living below the poverty line are feeling the pinch in purchasing even used items.
“The markets have been witnessing not only low income but also middle and upper income people as many of them are equally hit by the high rising cost of living triggered by frequent increase in power rates, fuel and transportation charges and increase in food prices,” he said.
Used items now also lure upper class people whose presence is evident in the Sunday Bazaars of posh areas, Light House and Saddar searching for branded and designer goods.
Farooqui urged Prime Minister Mian Nawaz Sharif and Finance Minister Mohammad Ishaq Dar to reduce income tax to 1pc and GST to 4pc so that the masses can take advantage and purchase basic necessities.
He informed the PM in a letter that people in Northern Areas failed to purchase worn clothing due to high prices.
Meanwhile, retailers at Light House, M.A. Jinnah Road said that they had huge unsold winter stocks as they were disallowed to operate in the area for more than 20 days this month after a crackdown against encroachers by the government.
A similar crackdown was also initiated in Saddar and Empress Market areas a day back against road side vendors.