During the first two days of the current interim administration in Karachi, the cost of living has increased significantly, as the prices of sugar and steel bar have risen sharply.
Increasing transportation costs as a result of a Rs20 per litre increase in diesel rate, the rupee’s depreciation against the dollar, and stockpiling have aggravated an already struggling consumer.
According to sugar merchants, the wholesale price has increased by Rs8 per kilogramme to Rs153 in just two days, driving the retail price from Rs150-155 per kilogramme to Rs160 per kilogramme. The price per kilogramme has increased to Rs170 from Rs160-165 in online stores.
The president of the Karachi Wholesalers Grocers Association (KWGA), Rauf Ibrahim, stated that the new caretaker set-up began on a “disastrous note” because the petrol shock it delivered shortly after its inauguration would be catastrophic for the end user.
“Like the previous government, the caretaker administration has no legal authority,” he said, adding that speculators and investors had seized control of the sugar trade. “Stockpiles have been amassed by hoarders, but the government appears to be doing nothing.”
If the government launched an assault on the warehouses of hoarders and millers, he was confident that the price of sugar would immediately fall below Rs100 per kilogramme.
“There was no need for the outgoing Sindh government to announce the sugarcane support price of Rs425 per 40 kg, as the crushing season would not climax until December-January, despite the government’s directive that it begin in October-November.
Considering last year’s cane price of Rs300 per 40 kg, Rauf Ibrahim added: “It would exert additional pressure on the price.”
According to data from Large Scale Manufacturing (LSM), sugar production decreased by 15.3 percent to 6.7 million tonnes in FY23, from 7.921 million tonnes in FY22, despite a 2.8 percent increase in sugarcane production from 88.65 million tonnes in FY22 to 91 million tonnes in FY23.
Vice President of the Pakistan Biscuit and Confectionery Manufacturers Association Javed Sarwana stated that the sugar crisis had reached an alarming level.
This is merely an effort by rent-seekers to generate illicit profits.
Sarwana urged the government to take action against “market manipulators” to end the “practise of robbing consumers.”
The downstream industry, which utilises sugar as a raw material, has been shaken by these astronomical price increases. Javed Sarwana added, “We have no choice but to close our factories if the government does not come to our aid.”
He urged the government to take prompt action against “carteling elements.”
M. Waqar Ghani of JS Research stated that the price of steel rods has reached Rs270-280 per tonne, a rise of Rs10,000 per tonne.
A manufacturer of steel bars attributed the price increase to a “unprecedented rise” in energy costs and a highly volatile rupee-dollar exchange rate.
He added that the industry can no longer tolerate significant fluctuations in manufacturing costs.
During the first two days of the caretaker government, the dollar has strengthened by Rs7 on the interbank market, increasing the cost of imported raw materials and finished products.
However, the average price of iron and steel slag decreased from $593 in FY22 to $523 in FY23, based on imports of 2.199 million tonnes ($1.152 billion) versus 3.88 million tonnes ($2.3 billion).
From August 18 to August 31, Balochistan Wheels Limited (BWL) has decided to temporarily suspend production.
In a filing with the Securities and Exchange Commission on Thursday, the company attributed the shutdown to a decline in sales orders as a consequence of local auto assemblers’ decreased production volumes. The company intends to resume production beginning September 1.