Rupee’s appreciation brings no relief to consumers

Published August 21, 2022
Fresh local and imported vegetables and fruits are displayed at a superstore in Karachi. — Dawn/File
Fresh local and imported vegetables and fruits are displayed at a superstore in Karachi. — Dawn/File

KARACHI: The coalition government has failed to provide any relief to the masses awaiting a price cut in all essential commodities after the strengthening of the rupee against the US dollar.

All commodity prices have soared or stayed unchanged despite an almost 12 per cent jump in the rupee’s value, which has substantially brought down the landed cost of imported goods mainly palm oil, pulses and other foodstuffs.

Commodity market players increase prices after the dollar rises, but they usually don’t reduce rates when the rupee appreciates, reflecting weak monitoring by federal and provincial governments.

On July 28, the greenback was available at Rs239.96 in the interbank market compared to the current rate of Rs214. A survey showed that in less than a month the price of masoor soared to Rs340-380 per kg from Rs320-340, mung to Rs210-240 from Rs190-220, mash to Rs360-400 from Rs320-360 and gram pulse to Rs240-260 from Rs230-250.

Commodity prices even go up or stay unchanged despite nearly 12pc increase in local currency’s value against dollar

Pulses’ import rose to 59,352 tonnes ($53m) in July from 48,392 tonnes in June ($43m). However, these figures are much lower than imports of 127,167 tonnes ($89m) in July 2021.

In FY22, pulses imports fell to 897,352 tonnes ($611m) from 1.266m tonnes ($709m) in FY21.

Karachi Wholesalers Grocers Association Patron-in-Chief Anis Majeed said heavy rains in the interior Sindh had seriously affected the drying process of pulses (whole form) at processing mills, resulting in slowing down of supplies in the wholesale market. Drying of pulses takes at least one day.

He said importers had also released previous shipments at higher dollar values, thus making them a bit hesitant in cutting the prices.

Consumers have also not witnessed any downward trend in the prices of tea and ghee/cooking oil which had been raised on the sliding rupee against the greenback. Tier 1 branded five-litre cooking oil pack still costs Rs2,995. The 2.5 kg ghee sells at Rs1,480 while one kg/litre pouch of ghee and cooking oil is priced at Rs580.

Pakistan Vanaspati Manufacturers Association General Secretary Umer Islam Khan said the manufacturers of second and third-tier brands, which usually don’t carry a price tag, had reduced prices to Rs450 from Rs510-520 per kg/litre on ghee and cooking oil. Some low-quality products were selling below Rs400 per kg/litre.

However, tier one manufacturers usually print their prices on every pack and they maintain a gap of one month in announcing new prices depending on the palm oil prices and rupee-dollar rates.

Mr Islam claimed that tier one brand makers are likely to slash prices in the last week of August as their stocks of higher prices have almost exhausted in the markets.

He said world palm oil prices had plunged to $1,050-1,100 after hitting a peak of $2,050 per tonne in March. The July shipments booked at $1,030 per tonne are now arriving at the port.

The manufacturers are passing on the impact of falling palm oil prices and rupee recovery against the dollar despite higher transportation charges, gas and power rates, he said, recalling that many shipments were booked at higher rates a few months back and were released when one dollar was equal to almost Rs240 during the last week of July.

Palm oil imports in July surged to 188,562 tonnes ($299m) from 86,975 tonnes ($143m) in June and 221,677 tonnes ($254m) in July 2021.

Palm oil imports, however, plunged to 2.8mn tonnes ($3.549bn) from 3.197mn tonnes ($2.668bn) in FY21.

Costly tea

A trader said the tea prices have not fallen yet and instead unpacked brands had seen a rise ofRs150-200 per kg in the last four months due to the clearing of old shipments from the port at a higher dollar value.

Wheat and sugar are also being imported to bridge the demand-supply gap but they could not ensure any price cut so far. The price of a 20kg wheat flour bag has risen to Rs1,880-1,960 from Rs1,800-1,940 per bag in less than a month. Pakistan imported 2.2m tonnes of wheat valuing $795m in FY22 versus 3.6m tonnes costing $983m in FY21. In July, wheat imports stood at 211,597 tonnes ($107m).

Published in Dawn, August 21st, 2022

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