KARACHI: Falling world commodity prices, low transportation costs and stability in the exchange rate have failed to bring any respite for the consumers in the last five months as retail prices either crawled up or held unchanged due to an ineffective price checking mechanism.

A drop of over 16 per cent in food imports during 5MFY24 to $3.35 billion from $4bn in the same period last year might have helped in curtailing the current account deficit (CAD). However, wheat, palm oil and pulses continued to hold a bulk share in the overall food imports.

Besides paying high prices for edible items, the extra burden of high utility bills has made the lives of many low- and middle-income families more miserable, causing them either to adjust the usage of electrical appliances or to curtail food purchases.

One cannot rule out the role of manufacturers for not passing on the full impact of lower world commodity prices, transportation expenses and stability in the exchange rate, while retailers also remained reluctant to bring down the prices.

A crackdown on sugar hoarding a few months back had brought sugar rates to Rs130 per kg from over Rs200 but prices surged to Rs168 per kg a few days back after the crackdown had been suspended.

Crackdown suspension

A partial crackdown was also witnessed on wheat hoarders a few months back but the powerful lobby of millers managed the situation. After putting extra pressure, they got permission to import wheat. As a result, wheat imports stood at 1.054 million tonnes ($308m) during 5MFY24 as compared to 1.099m tonnes ($460m) in the same period last year, posting a drop in the average per tonne (APT) price to $292 from $418.

The Trading Corporation of Pakistan (TCP) also issued an international tender in the last week of November to import 110,000 tonnes of grain for January/February shipment.

As per data of the Sensitive Price Index (SPI), a 20kg wheat flour bag was available at Rs2,550-3,000 during the first week of July 2023 as compared to the current rate of Rs2,700-2,960, depicting no major downward price trend.

The rupee made a recovery against the dollar from the September 5 peak of Rs307.10 to Rs276 by Oct 16.

Currently, one dollar in the interbank is trading at Rs282.

The transportation cost has also fallen due to a decline in high-speed diesel (HSD) rates to Rs276.21 per litre from a peak of Rs329.18 on Sept 16.

Millers believed that imports were activated to bridge a demand and supply gap given the demand of 31-32m tonnes of grain annually as against a conflicting wheat harvest claim of 27-28 million tonnes by the government as against 26m tonnes to 26.5m tonnes by the millers. The country had two million tonnes of grain of last year’s carryover stocks.

Millers had reduced the price of flour no 2.5 and fine flour by Rs25 per kg to Rs120 and Rs135 per kg after rising wheat imports but in the second week of December, they later raised prices to Rs127 and Rs140 for both the flour varieties, citing delay in arrival of Russia wheat.

Costly pulses

Import of pulses soared to 641,656 tonnes ($403m) during 5MFY24 from 595,389 tonnes ($454m) in the same period last year. Despite a drop in APT to $629 from $762, consumers are still paying Rs320-400 per kg for Masoor, Rs250-350 for Moong and Rs360-600 for Mash as compared to Rs250-320, Rs220-320, Rs300-510 and Rs210-300 prevailing during the first week of July 2023. As per SPI data, the price of gram pulse held unchanged at Rs210-330 per kg.

The official data shows the price of less than 250 gram branded tea packs at Rs542-677 as compared to Rs558.82 during the first week of July 2023 despite a drop in APT to $2,384 from $2,463 based on the import of 116,407 tonnes ($277m) in July-November FY24 from 100,680 tonnes ($248m) in the same last year.

Cooking oil

The country imported 1.248m tonnes of palm oil ($1.175bn) during July-November FY24 versus 1.23mn tonnes $1.724bn in the same period last fiscal, reflecting a drop in APT price to $941 from $1,398 in the above period.

The SPI data mentioned a drop in the prices of cooking oil Dalda or other similar products, vegetable ghee 2.5kg and one kg pouch of branded ghee of different brands to Rs2,565-2,960, Rs1,250-1,400 and Rs480-519 from Rs2,950-3,290, Rs1,375-1,550 and Rs525-595 during July 2023.

Import of spices fell to 51,562 tonnes ($61mn) in 5MFY24 from 62,975 tonnes ($61mn) in the same period last fiscal. The APT soared to $1,186 from $967 in the above period. As per SPI data, a 200-gram pack of branded chilly powder now costs Rs 400 as compared to Rs215.

Published in Dawn, December 26th, 2023