KARACHI: Prices of packaged milk and sugar have gone up by Rs5 per litre and Rs2 per kilogram, respectively.

Retailers said this was the second increase in Tetra Pak milk prices after May. It now costs Rs115 per litre and Rs170 per 1.5 litres.

The dairy industry cites changes in taxes and duties announced in the latest budget as reason for the price hike.

The industry previously anticipated a rise of Rs7 per litre from the budgetary measures which would generate at least Rs9 billion in revenue.

Meanwhile, retailers raised the price of sugar to Rs72 per kg on Friday from Rs70 last week, blaming increase in wholesale rates. The commodity was selling for Rs63-65 per kg during Ramazan.

The wholesale price is now quoted at Rs67.40 per kg compared to Rs60-62 in Ramazan. The city government has fixed the wholesale price at Rs60 per kg.

Sugar has been under pressure since December 2015 when the government allowed 500,000 tonnes of sugar exports with a subsidy of Rs13 per kg till March 31, 2016. As a result, the price rose to Rs60-62 per kg from Rs55.

The government earlier allowed 650,000 tonnes of sugar exports with a subsidy of Rs10 per kg. Moreover, a 40 per cent regulatory duty on the import of raw and beet sugar was also imposed to protect millers.

However, subsidies and incentives did not work and exports remained subdued due to lower prices on the world market.

Some companies instead cashed in on falling global prices by importing the commodity. Around 12,000 tonnes of sugar costing $6.2 million were imported in the fiscal year 2015-16 compared to nearly 10,000 tonnes costing the same amount of money in 2014-15. This translated into lower average per-tonne import price of $513 in 2015-16 compared to $619 a year ago.

Moreover, there were zero exports of sugar from April to June according to the Pakistan Bureau of Statistics.

Overall, sugar exports fell to 293,541 tonnes (fetching $132m) in 2015-16 from 708,358 tonnes ($322m) in 2014-15. The export price came to $450 a tonne on average in 2015-16 compared to $454 in 2014-15.

Sugarcane production during the previous fiscal year was 65.5m tonnes, a rise of 4.2pc compared to 62.8m tonnes a year ago. Sugar output in July-May 2015-16 stood at 5.108m tonnes as compared to 5.149m tonnes in the same period of 2014-15.

Published in Dawn, July 30th, 2016