Keeping with the usual trend, grocery bills swelled again this Ramazan pushing up the monthly household expense level. The spike in the size of the kitchen budget, across all classes and regions, esc lated the Ramazan economy to hit an estimated Rs550bn this year.

Questions that follow if we accept the projection are not easy to answer. Where does all this money come from? Can Pakistani families afford to spend all their regular income?

The effort to estimate the size of the Ramazan economy and sources of its financing lead us to believe that besides private incomes and savings, cash flows from: (a) overseas remittances, (b) Zakat, (c) the corporate sector’s advance salaries, bonuses and loans to employees, and (d) the bank credit contribute to household spending.

The projected Rs550bn figure is derived, in the absence of available consolidated sale, supply or consumption data, by adding Rs50bn (10pc) to an estimate of Rs500bn additional family spend during Ramazan in 2014.


State Bank officials agree privately that both money supply and its circulation in the holy month are way higher than the average


The 2014 figure was based on the summation that two-thirds of the total inflow of remittances were diverted to cover Ramazan expenses (Rs170bn of total Rs250bn), 2pc cash withdrawals of the total bank deposits in the month (Rs160bn of the total Rs8trn), credit advances (Rs25bn), total worth of bonuses and loans against provident fund by the corporate sector in the month (Rs15bn) and undeclared money that surfaces (Rs130bn).

State Bank officials agree privately that both money supply and its circulation in the holy month are way higher than the average. The formal query to provide processed data to indicate the trend of money supply and its circulation in weeks that fall in Ramazan, over the past five years, was reluctantly accepted, but the response did not arrive within time for this report.

Dr Nadeem Javaid, chief economist, Planning Commission of Pakistan, found the figure for 2014 reasonably credible under the circumstances. Dr Miftah Ismail, chairman of Board of Investment, considered it an underestimation.

“We know from our own experience that family spending spikes in Ramazan as eating preferences change in this month. For me on a countrywide scale Rs550bn addition spend in Ramazan is believable”, Dr Nadeem Javaid commented over phone from Islamabad. He also acknowledged the need to gauge variations in the economic activity on special occasions for a better understanding of the country,ssocio economic trends..

Lack of documentation constrains credible calculation but he suggested another way to arrive at the size of the Ramazan economy. “By extrapolating hike in the sale of FMCGs during this period of lunar calendar, a number can be attained to assess the scale of expansion in the market”, he said.

The problems with the advised method were many but it proved to be a non-starter as private companies do not allow access to weekly sale figures. Earlier attempts to seek information from Lever Brothers and Proctor and Gamble, etc. proved futile.

A deeper look at the composition of Ramazan budget of an average family was attempted for a better idea of the pattern of spending within a kitchen basket. Generally it seems individuals tend to spend not only more money but also more time in kitchen. There is a greater focus in homes on food preparations.

And Ramazan specific special products such as ‘Khajla/Pheni’ are popular and sold only in this month. An interview based survey of the market confirmed that demand for all edibles does not increase uniformly and the sale of certain products increase multiple times.

Anis Majeed, chairman of Karachi Wholesale Grocers Association, told Dawn that the sale of ‘Baysun’ and ‘Kabuli Channa’ multiplies several times over while other basic items used for taste and aroma in sub continental dishes also increase significantly. He said the increase in the use of sugar by families compensates for the fall in demand by hotels and eateries that are closed during the day time. He believes that owing to the greater sugar consumption in homes the total sale of sugar increases marginally.

A major hike is witnessed in the use of milk that shoots up in urban areas more than the countryside. The packaged milk makers, according to marketers, might not be benefitting proportionately as in Ramazan. People are more inclined towards fresh milk and yogurt that is used both for direct consumption and for various dishes. The share of packaged milk that is estimated to be 7pc of the total sales normally shrinks in Ramazan.

The consumption of costlier items such as meat increases marginally but demand for poultry, which is now perceived to be cheaper, hikes. “We are sold out by afternoon despite getting more than average supplies”, a meat merchant in a middle class locality of Karachi said.

All seasonal fruits and certain vegetables sell many times more than the average. “Dates consumption in Ramazan is about 90pc of the country’s total annual consumption but people do not consider Iftar complete without sliced fruits”, observed Nasreen, a home maker.

The sale of fruits rises by as much as 200pc, according to retailers reached for their response. “Often too much fruit arrives in urban markets, like in the case of some varieties of melons currently, that upset the price balance”, Nadir Khan, a fruit stockiest in Karachi, Saddar area said.

The sale of leading bread brands takes a dip in Ramazan, and goes down up to 40pc. Flour consumption falls as day meal is skipped by fasting people. ‘Pakoras’ and ‘dehi barres’ substitute partially for ‘roti’.

“Why are you fixated with daily consumption? I believe the sale of durables even cars goes up as people time the face-lifting of home assets such as fridge, AC or even cycle, motorcycle, curtains, carpets, bed sheets; house whitewash are often done during Ramazan. You may interpret the consumer behaviour the way you want”, remarked a lady.

Published in Dawn, Business & Finance weekly, June 27th, 2016

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