As the Islamic holy month of Ramadan is expected to begin on Wednesday, 22 March of this year, a struggling and broke Pakistan is bracing for a further jump in the already skyrocketing inflation in the country.
The government increased the General Sales Tax to 18% from 17% coupled with federal excise duty on Wednesday, adding worries for customers who are already struggling under rising prices for nearly all necessities.
Despite the rupee’s value recovering by almost Rs. 11, which lowers the cost of importing raw materials and finished goods, manufacturers have yet to offer any price relief, reported Dawn.
Pakistan Vanaspati Manufacturers Association General Secretary Umer Islam Khan projected a surge of Rs. 3 to Rs.5 per kg/litre in ghee and cooking prices after the GST hike.
According to him, commercial banks continue to be reluctant to open letters of credit (LCs) for the importation of edible oils. After the inauguration of LCs, goods generally take 45 to 60 days to reach Karachi ports.
“If this situation persists the industry would be unable to meet the demand for ghee/cooking oil in Ramadan,” he warned.
Pricey Steel And Cement
As a result of the increase in GST, Agha Steel Industries has increased the price of steel bars in the diameters 16-32 mm and 10-12 mm to Rs. 304,000 and Rs. 306,000 from Rs. 300,000 and Rs. 302,000.
From Rs. 301,500 and Rs. 303,500, Naveena Steel Mills has announced revised rates of Rs. 305,500 (16-32 mm) and Rs. 307,500 (10-12 mm).
According to a cement manufacturer, the combined effect of the GST increase and the Federal Excise Duty (FED) increase from Rs. 1.5 to Rs. 2 per kg will further elevate the price of a 50 kg cement bag by Rs. 38–40 per bag.
Faraz-ur-Rehman, president of the Korangi Association of Trade and Industry (KATI), claimed that the new taxes measures to placate the International Monetary Fund will further reduce consumer purchasing power.
Expensive Bikes
The effects of new tax laws were quickly communicated by automakers. For instance, Atlas Honda Ltd (AHL), the company that assembles Honda motorcycles, raised the rates on Wednesday by Rs. 9,000 to Rs. 35,000.
The new prices for CD70, CD70 Dream, Pridor, CG125, CG125 S, CB125F, CB150F, and CBI150F (Silver) are respectively Rs. 137,900, Rs. 147,500, Rs. 81,500, Rs. 205,900, Rs. 243,900, Rs. 330,900, Rs. 418,900, and Rs. 422,900.
As opposed to the previous rate of Rs. 18,729-56,361, the government would now collect Rs. 21,035-64,510 on various engine capacity bikes.
According to a recent projection by Moody Analytics, Pakistani inflation could average 33% in the first half of 2023 before falling lower, and the International Monetary Fund (IMF) bailout won’t likely be enough to restart the country’s economy on its own. Moody’s has predicted a 2.1% economic growth for the year 2023.
