July 5, 2024

Milk prices in Pakistan surge after new tax implementation

Milk prices in Pakistan surged by more than a fifth following the introduction of a new tax, making the dairy staple more expensive than in France, Australia, and other developed nations, The Times of India reported.

Ultra-high temperature (UHT) milk now costs US$1.33 per litre in supermarkets in Karachi. By comparison, it costs US$1.29 in Amsterdam, US$1.23 in Paris, and US$1.08 in Melbourne, according to data collected by Bloomberg.

An 18% tax was applied to packaged milk as part of taxation changes approved in the national budget last week. Previously, it was tax-exempt. This new tax has resulted in retail prices increasing by as much as 25%. Before the tax, milk prices in Pakistan were comparable to those in developing countries such as Vietnam and Nigeria, said Muhammad Nasir, a spokesman for the local unit of Dutch dairy producer Royal FrieslandCampina NV.

The higher cost of milk will contribute to rising inflation in Pakistan, where wages have stagnated, reducing spending power. The price increase is also likely to exacerbate child health issues. Approximately 40% of the nation's population lives in poverty.

Last week's budget included a 40% increase in taxes, the highest on record, aimed at meeting conditions set by the International Monetary Fund for a new bailout.

-      The Times of India