Food prices remain high despite fuel and commodity rates crash

Updated 31 Mar 2020

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KARACHI: People wait for their turn to buy grocery items on subsidied prices at a utility store on Monday. The rush on the government stores is rising as retailers are charging higher prices cashing in on the Covid-19 lockdown.—PPI
KARACHI: People wait for their turn to buy grocery items on subsidied prices at a utility store on Monday. The rush on the government stores is rising as retailers are charging higher prices cashing in on the Covid-19 lockdown.—PPI

KARACHI: Consumers are yet to get any benefit in commodity prices despite Rs20 per litre cut in diesel prices and declining international rates of pulses, tea and edible oil.

Manufacturers, wholesalers and retailers are cashing in on an extraordinary demand for commodities during the lockdown to contain the spread of coronavirus pandemic.

Traders usually avoid talking about any price cut in the wake of low transportation cost and decline in international commodities prices, diverting attention to rising import costs in the wake of rupee’s depreciation against the dollar.

In addition to burgeoning sales of essential commodities at wholesale markets, the rush of buyers in retail markets has intensified from 3pm to 5pm especially at super stores and retail markets as buyers rush to replenish stocks at home in order to avoid visiting markets during the lockdown.

The average prices of pulses in 8MFY20 fell to $496 per tonne from $540 but wholesalers have pushed up the prices in the domestic markets. Wholesalers have increased prices amid heavy buying from welfare trusts, upper class and industrialists, who are buying bulk quantities to distribute ration among unemployed and daily-wager earners.

Prices of per kg wholesale gram pulse rose to Rs145 from Rs130 followed by masoor to Rs150 from Rs100 per kg. Moong price swelled to Rs250 from Rs210 per kg, while mash price increased to Rs200 from Rs165 per kg.

Pulses imports during the July-Feb FY20 period stood at 754,885 tonnes ($375 million) as compared to 659,459 tonnes ($356.6m) in the same period last fiscal year, data released by the Pakistan Bureau of Statistics showed.

Karachi Wholesalers Grocers Association (KWGA) Chairman Anis Majeed said he cannot share price of pulses as the commodity remained in short supply after law enforcement agencies repeatedly detained vehicles at Karachi’s entry points which were arriving from Hyderabad and up country.

“Our sales of rice, sugar and pulses are up by 100 per cent because of extensive buying by welfare organisations, industries and rich people etc for providing ration to the needy families.” Pulses prices had mainly surged on soaring demand, he added.

The government on Monday had extended another relief to pulses importers by bringing down advance tax on import to zero from 2pc.

Volatile exchange rate continues to offset the benefit of low diesel prices and falling global commodity prices and that would even dilute the impact of zero advance tax on import of pulses, Anis said while claiming that transporters had also not reduced their fares.

He said transporters are also facing labor shortage as many of them had already returned to their native areas after coronavirus. Despite a drop in diesel prices, transporters are charging higher fares from wholesalers.

The average world palm oil price dropped to $587 per tonne from $604 but ghee and cooking oil prices have remained high during the last eight months. Palm oil imports in 8MFY20 stood at 2.012m tonnes ($1.182 billion) as compared to 2.044m tonnes ($1.23bn) in the same period last fiscal year.

To bring down prices, the government on Monday exempted additional customs duty of 2pc on palm oil imports.

Pakistan Vanaspati Manufacturers Association (PVMA) former vice chairman Sheikh Umer Rehan said the palm oil prices in the international market have risen to $615 per tonne from $550 per tonne in the last 10 days after buying from China resumed.

He calculated a jump of Rs20 per kg/litre in ghee and cooking oil prices as a result of rupee depreciation against the dollar and increase in international palm oil prices.

Umer said that bringing down tax on import of palm oil to zero from 2pc would not have any significant impact on domestic prices of ghee and cooking oil.

Local tea prices maintained an upward trend despite decline in world average prices to $2,405 per tonne from $2,632 in 8MFY19. Total tea imports in the last eight months fell to 134,853 tonnes ($324m) from 149,510 tonnes ($393m).

Published in Dawn, March 31st, 2020