As economy finds momentum, price pressures mount

Published December 27, 2020
A woman picks up a carton of cooking oil at a store. Increase in ghee and cooking oil prices is forcing many consumers to buy these items on a ‘as needed’ basis instead of bulk buying as part of monthly grocery.
A woman picks up a carton of cooking oil at a store. Increase in ghee and cooking oil prices is forcing many consumers to buy these items on a ‘as needed’ basis instead of bulk buying as part of monthly grocery.

KARACHI: Rising prices of raw materials in local and world markets are causing extensive price pressure on various essential commodities, either edible or those used as raw material or fuel in industry. Rising demand as well as escalating global prices are driving the phenomenon.

The wholesale price of sugar has crawled up by Rs5 per kg in the current week despite frequent imports by the private and public sector.

Cereal Association of Pakistan Chairman Muzzamil Chappal said the private sector had imported 130,000 tonnes of sugar from the UAE, Egypt, Brazil and Saudi Arabia during October-December out of an allocated quota of 150,000 tonnes.Trading Corporation of Pakistan (TCP) after cancelling 26,000 tonnes out of total 151,000 tonnes, has imported 129,562 tonnes.

Egg price in Karachi further rose to Rs205 per dozen from Rs200 two days back due to soaring demand in winter, while it is selling at Rs240 a dozen in Quetta. In last winters, consumers used to pay a maximum price of Rs13-14 per egg which is now Rs17-18.

Pakistan Poultry Association (PPA) Executive Committee Member Abdul Maroof Siddiqui blamed rising cost of production of egg and poultry owing to jump in 50 kg feed bag price to Rs3,700 as compared to Rs3,000.

However, the cost of import has fallen on account of rupee appreciation against the dollar from August till date as one dollar now equals to Rs160 in the inter bank market as compared to Rs168 in August. The stakeholders usually avoid this issue in the discussion.

Notable increase was witnessed in ghee, cooking oil and egg prices amid clear instructions given by Finance Minister Abdul Hafeez Shaikh to the provinces during the National Price Monitoring Committee meeting on Dec 21 to take notice on price hike, besides asking the commerce ministry to hold a meeting with the stakeholders.

Palm oil in the local market is now priced at Rs7,800 per maund which was Rs5,200 six months back. The 16kg ghee tin price ranges between Rs3,800-Rs4,000 which was Rs2,300-Rs2,500.

In local markets, five litre soft pack of canola is selling at Rs1,530 versus Rs1,320, while another brand of 5-litre cooking oil costs Rs1,240 as compared to Rs1,195.

Former chairman Pakistan Vanaspati Manufacturers Association (PVMA) Sheikh Amjad Rasheed said world palm oil price is now being quoted at $985 C&F Karachi which is $400-450 per tonne higher as compared to six months ago.

PVMA former vice-chairman Sheikh Umer Rehan said surging prices of palm oil in the last five months had made an impact of Rs55 per kg/litre in ghee and cooking oil which is being passed to the consumers.

“Oil and ghee prices can plunge only when the government will lower the duties and taxes on import of palm oil to offset frequent hike in world palm oil prices,” he added.

According to the Pakistan Bureau of Statistics (PBS), the average per tonne price of palm oil in the first five months (July-November) 2020-21 soared to $659 from $550 in the same period of 2019. Total imports of palm oil in the above period stood at 1.333 million tonnes valuing $876 million as compared to 1.230m tonnes costing $106m.

Karachi Retail Grocers Group General Secretary Farid Qureishi said locally produced sugar price in retail markets had risen to Rs85 from Rs80 per kg following a jump in wholesale price to Rs77-78 from Rs72.

He said imported sugar which is available in little quantities at wholesale price of Rs73 per kg had been consumed all over the country.

Cement prices had witnessed a jump of Rs45 per 50 kg bag in North to Rs 550 per bag on which the government is holding an inquiry while price in Southern region has been unchanged at Rs610-665 per bag.

Cement makers say the rise in coal price is the reason, which has gone to $91-92 per tonne C&F Karachi from $55-$58 six months back.

A cement maker said coal, arriving from South Africa, Indonesia and Australia, holds 30 per cent share in total input cost of cement manufacturing and its price hike is pushing up the cost of production.

Meanwhile steel makers have been claiming rising world prices in shredded scrap to justify a jump of over Rs15,000 in steel bar prices from November till to date.

However, figures of Pakistan Bureau of Statistics (PBS) reveal a drop in per tonne price of steel and iron scrap to $345 per tonne form $392 per tonne in October. Overall Iron and Steel Scrap imports in July-November 2,020 surged to 2.206m tonnes ($781m) as compared to 1.688m tonnes ($661m) in the same period a year ago.

The average per tonne price of steel scrap in 5MFY21 of iron and steel scrap fell to $354 from $391 in the same period last year.

Published in Dawn, December 27th, 2020

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