October 30, 2023
ISLAMABAD – The nine per cent jump in the rupee’s value against the dollar since Sept 5, sliding world prices and falling transportation costs have not brought any big price relief for the consumers in retail markets in nearly two months despite a downward trajectory in wholesale rates.
One dollar was trading at Rs307.10 on Sept 5 compared to the current rate of Rs280, making the landed cost of imported raw materials and finished goods cheaper. A sort of downward trend in diesel rates was also witnessed. It was priced at Rs311 per litre on Sept 1 which then rose to Rs329 on Sept 16. It then fell to Rs318 on Oct 1 and currently, its price is Rs303 per litre, making goods’ movement either lower or manageable for the transporters.
Retailers never show any mercy in instantly passing on the impact of the falling rupee and high transportation cost to the consumers, but they act too slowly in reducing the rates, repeating old rhetoric of clearing unsold old stocks in the markets lifted on higher rates.
The only instant price relief consumers have received is in sugar rates, thanks to an effective crackdown on sugar mafia, hoarders and smugglers, bringing down wholesale as well as retail rates.
Crackdown on hoarders and smugglers leads to reduction in sugar prices
The wholesale sugar rate has crawled down to Rs123 per kg from a peak of Rs174 during the first week of September, while the sweetener is now sold at Rs135-145 in retail markets versus Rs180-195, reveals data of Sensitive Price Indicator (SPI) relating to Karachi city.
The SPI data shows a mixed trend in retail rates of various pulses. The retail prices of masoor, moong, mash and gram pulse stood at Rs300-360, Rs280-320, Rs520-580 and Rs220-260 per kg compared to Rs320-360, Rs280-320, Rs540-580 and Rs240-280 per kg during the first week of September. The wholesale rates of masoor, moong, mash and gram pulse had plunged to Rs260, Rs240, Rs470 and Rs200 per kg, respectively, from Rs330, Rs265, Rs520 and Rs226 per kg.
Pulses imports rose to 386,837 tonnes ($242m) in 3MFY24 from 316,537 tonnes ($246m) in the same period last fiscal. The average per tonne price plunged to $628 from $777.
Ghee/cooking oil manufacturers claim to have reduced the price by Rs80-100 per litre over the last two months, but the SPI data shows a minor drop in the prices of ghee and cooking oil.
Palm oil imports rose to 793,951 tonnes ($758m) during IQFY24 compared to 761,424 tonnes ($1.135bn) during the same period last fiscal year. The average per tonne price fell to $955 from $1,191.
Wholesalers claim a drop of Rs15-80 per kg in the prices of various varieties of rice. They quote the rate of Kernal Basmati (export quality), Kernal Basmati No 1, Basmati 386, Basmati Sela No 1 quality, Super Basmati Poonia, Irri 6, Irri 9 and Basmati Tota at Rs350, Rs320, Rs90, Rs250, Rs260, Rs140, Rs220 and Rs210, respectively, versus Rs380, Rs350, Rs240, Rs330, Rs275, Rs160, Rs260 and Rs240 per kg.
In contrast, the SPI data mentions only a few varieties like Basmati Broken (average quality) and Irri 6/9 (Sindh/Punjab) whose rates have been unchanged at 260-300 and Rs170-190 per kg in the last one-and-a-half months.
The SPI data mentioned a branded tea pack (less than 250 grams) at Rs542-558, showing no notable drop despite a fall in world tea prices. Tea imports swelled to 70,380 tonnes ($165m) in July-Sept 2023 from 55,329 tonnes ($135m) in the same period last fiscal year, depicting a drop in APT price to $2,350 from $2,443.
Commissioner Karachi’s strict action forced the retailers to sell fresh milk at Rs200 per litre instead of Rs220-230 which is visible from the display of official rates in the shops reflecting retailers’ fear of paying heavy fines and facing imprisonment.
The SPI data shows a drop in the rate of 20kg flour to Rs2,700-3,000 from Rs3,000-3,200 amid the arrival of imported wheat. The private sector had imported 162,301 tonnes ($46m) of imported grain in September and hopefully, 500,000 tonnes would arrive in October. The wholesale rate of flour No 2.5 and fine atta had dropped to Rs130 and Rs141 from Rs141 and Rs150, respectively. However, retailers are charging Rs140-150 and Rs150-160 for flour No 2.5 and fine atta, respectively.
The powerful lobby of packed milk raised the rate by Rs10 per litre to Rs280 and Rs3 in 250ml pack to Rs73 despite the rising rupee and low transportation cost. The SPI data mentioned the price of Nido powdered milk (390-gram poly bag) at Rs800-830 against Rs790-820 prevailing in the first week of September.
Market watchers believe that there should be a 5pc commission of wholesalers and 10pc of retailers on various products, but the latter have no boundaries of minting profit ranging from 30-40pc on items missing printed prices. Retailers make additional profit in loose commodities in case of a rising price trend which was especially witnessed in sugar, wheat and wheat flour before the crackdown.
Karachi Wholesalers Grocers Association chairman Rauf Ibrahim said the crackdown should be extended from sugar and wheat to other commodities like rice, pulses, etc, to bring down their prices at the retail level. The government, he added, should discontinue wheat quota to the flour mills and sell confiscated sugar at Rs90 per kg to help poor people.