Tag: price hikes

  • Car sales increase in Pakistan despite high prices, economic challenges

    Car sales increase in Pakistan despite high prices, economic challenges

    In a surprising turn of events, the soaring prices of cars in Pakistan have not deterred buyers, as car sales experienced a notable uptick in February 2024.

    According to data released by the Pakistan Automotive Manufacturers Association (PAMA), car sales edged up by 1.94 per cent, reaching 7,953 units, compared to 7,802 units recorded in January 2024.

    This positive momentum follows a robust performance in the preceding month, where car sales hit their highest mark since December 2022.

    Analysts attribute this continued growth to the momentum generated by the new year, which has carried over into February.

    Year-on-year comparisons reveal a substantial increase, with car sales spiking by 2.18 times compared to February 2023, when only 3,642 units were sold.

    However, despite this recent surge, cumulative sales for the first eight months of fiscal year 2024 stand at 46,417 units, marking a 40.93 per cent decline from the same period last year.

    Similarly, the production of passenger cars has witnessed a significant downturn, with 8MFY24 recording 48,402 units, reflecting a 40.84 per cent decrease compared to the previous fiscal year.

    In February alone, production plummeted by 16.77 per cent month-on-month, totaling 8,002 units, down from 9,614 units in January 2023.

    Nonetheless, on a year-on-year basis, production saw a remarkable surge of 69.97 per cent, indicating a shift in manufacturing trends.

    Despite these fluctuations, the automotive landscape faces challenges, notably with Pak Suzuki Motor Company announcing two price hikes within a span of ten days in response to increased sales tax.

    The repercussions of these adjustments on sales are anticipated to unfold in the coming weeks, as the market adapts to the new pricing structure.

  • Pakistan’s inflation eases slightly to 28.3% in January 2024

    Pakistan’s inflation eases slightly to 28.3% in January 2024

    The Pakistan Bureau of Statistics (PBS) reported that the country’s headline inflation for January stood at 28.3 per cent on a year-on-year basis, marking a slight decrease from the December figure of 29.7 per cent. The month-on-month reading recorded a 1.8 per cent increase.

    This latest data brings the average inflation for the period of July to January to 28.73 per cent, up from 25.40 per cent in the corresponding period of the previous year. Despite this surge, the inflation rate aligns with the government’s expectations.

    The Ministry of Finance, in its ‘Monthly Economic Update and Outlook’ report released on Wednesday, projected a CPI-based inflation rate of 27.5-28.5 per cent for January 2024. The report attributed the inflationary pressure to elevated prices of perishables and vegetables, along with increased utility costs for electricity and gas.

    A contributing factor to the rising prices has been a surge in onion export orders following the Indian ban, straining local supply and causing domestic prices to escalate.

    Severe weather disruptions led to supply shortages of tomatoes, resulting in price hikes, while reduced chicken supply, especially from controlled sheds facing higher input costs, contributed to increased chicken prices.

    JS Global, in a report from last week, anticipated that inflation would remain elevated, particularly in the food segment. The report predicted a 1.8 per cent month-on-month uptick in food prices, resulting in an overall January 2024 YoY CPI estimate of 27.9 per cent.

    The brokerage house noted that the CPI inflation in the coming months is expected to remain on the lower side amid the decline in local fuel prices and the high base effect of last year.

    Breaking down the inflation figures, urban areas recorded a year-on-year CPI inflation of 30.2 per cent in January 2024, slightly lower than the previous month’s 30.9 per cent and higher than January 2023’s 24.4 per cent. On a month-on-month basis, urban inflation increased by 1.8 per cent in January 2024.

    In rural areas, year-on-year CPI inflation for January 2024 was 25.7 per cent, down from the previous month’s 27.9 per cent but higher than January 2023’s 32.3 per cent. On a month-on-month basis, rural inflation increased by 1.9 per cent in January 2024.

    The PBS data indicates a nuanced inflationary landscape in Pakistan, with both urban and rural areas experiencing fluctuations in prices across various commodities. The government’s focus on addressing these challenges remains critical as it navigates the economic impact of inflation on citizens and businesses.

  • Pakistan’s weekly inflation soars beyond 44%

    Pakistan’s weekly inflation soars beyond 44%

    In the latest economic developments, Pakistan has witnessed a surge in weekly inflation for the third consecutive week, marked by a notable increase in the Sensitive Price Indicator (SPI) for the Combined Group.

    The SPI for the said group witnessed a significant rise of 1.36 per cent week over week (WoW) during the week concluded on January 11, 2024.

    Adding to the economic landscape, the SPI showcased a remarkable year-over-year (YoY) increase of 44.16 per cent, comparing the current statistics with the corresponding period from the previous year.

    Last week’s SPI for the Combined Group demonstrated a WoW increase of 0.81 per cent.

    Data released by the Pakistan Bureau of Statistics (PBS) reveals that the combined index stood at 317.92 in comparison to 313.66 on January 4, 2024.

    Notably, this index was recorded at 220.53 a year ago, specifically on January 12, 2023.

    Among the 51 items analysed, 21 experienced an increase in average prices, while prices for 8 items decreased, and 22 items remained stable.

    The noteworthy price hikes during the week were observed in tomatoes (15.63 per cent), onions (8.94 per cent), chicken (6.42 per cent), electricity charges for Q1 (5.11 per cent), and eggs (4.31 per cent).

    Conversely, significant decreases were noted in the prices of potatoes (5.92 per cent), vegetable ghee (1 KG) (0.84 per cent), sugar (0.43 per cent), vegetable ghee (2.5 KG) (0.29 per cent), and mustard oil (0.26 per cent).

    The weekly SPI percentage change, when categorised by income groups, indicated a uniform increase ranging between 1.2 per cent and 1.34 per cent across all quantiles. The lowest-income group experienced a 1.2 per cent rise, while the highest-income group recorded a 1.34 per cent increase.

    On a yearly basis, the analysis of SPI change across various income segments revealed an overall increase ranging from 36.06 per cent to 47.48 per cent.

    The lowest-income group witnessed a yearly rise of 36.06 per cent, whereas the highest-income group recorded a significant increase of 42.71 per cent.

  • SPI index surges to three-week high at 26.41%: Food and energy prices drive inflation

    SPI index surges to three-week high at 26.41%: Food and energy prices drive inflation

    The Sensitive Price Indicator (SPI) index recorded a notable surge, reaching 26.41 per cent for the week ending on September 7, 2023, marking a three-week high. This increase was primarily propelled by the persistent rise in food and energy prices when compared to the same week in the previous year, putting added strain on households’ purchasing power and disposable income.

    Within this week, data from the Pakistan Bureau of Statistics (PBS) revealed that out of 51 items, 32 (62.75 per cent) experienced price increases, 5 (9.80 per cent) saw decreases, while 14 (27.45 per cent) remained unchanged, in contrast to the previous week.

    Food items saw significant price hikes, including a 17 per cent increase in tomato prices, a 10.87 per cent uptick in pulse masoor prices, a 6.73 per cent rise in sugar prices, a 4.66 per cent surge in garlic prices, and a 3.62 per cent uptick in gur prices. Pulse moong prices rose by 3.55 per cent, onions by 3.43 per cent, and pulse gram by 3.25 per cent. Among non-food items, diesel prices soared by 6.28 per cent, LPG (liquefied petroleum gas) increased by 5.19 per cent, and petrol prices rose by 5.12 per cent.

    Conversely, there was a decline in the prices of certain items, including chicken by 3.20 per cent, 5-liter cooking oil by 1.03 per cent, 2.5 kg vegetable ghee by 0.47 per cent, Lipton tea by 0.43 per cent, and 1 kg vegetable ghee by 0.14 per cent, compared to the previous week.

    Looking at the bigger picture, the Consumer Price Index (CPI) revealed that monthly inflation has remained persistently high, averaging 27.8 per cent in the first two months (Jul-Aug) of the current fiscal year 2023-24. This was primarily attributed to recent rupee depreciation, imported inflation, and the continuous ascent of power and petroleum product prices.

    It is anticipated that September’s monthly inflation reading will reach its peak, with experts also suggesting the possibility of the government raising gas prices, further exacerbating inflationary pressures on the economy.

    To combat inflation, the Pakistan central bank is expected to raise its key policy rate by 1.5 to 2 percentage points during its upcoming Monetary Policy Committee (MPC) meeting on September 14. The current policy rate stands at a record high of 22 per cent.

    Topline Research highlighted significant developments since the last MPC meeting on July 31, 2023, including Pakistan posting a current account deficit of $809 million in July after four consecutive months of current account surplus. 

    Additionally, local fuel prices have increased by around 19 per cent, international oil prices in US dollars have risen by 6 per cent, and the rupee has depreciated by 6 per cent against the US dollar. These factors are expected to weigh heavily on the central bank committee’s decision during the upcoming MPC meeting.

  • Petrol and diesel prices expected to surpass Rs300 per litre this week

    As global oil rates surge and the rupee’s value against the US dollar weakens, there are growing indications that petrol and diesel prices in Pakistan could soon breach the significant Rs300 mark. The Oil and Gas Regulatory Authority (Ogra) is reportedly contemplating recommending a substantial increase in petroleum product prices for the upcoming fortnight, in an attempt to address the challenges posed by these economic dynamics.

    Sources indicate that if the proposal is approved, petrol prices might experience a sharp upswing of around Rs12 per litre, while diesel could see an even more substantial increase of Rs14.83 per litre. These potential hikes, set to take effect from September 1, 2023, have sparked concerns about their impact on the already high inflation rate, which currently stands at 28 per cent.

    A senior official from the Energy Ministry has expressed apprehensions regarding the potential consequences of these price adjustments. Balancing the need to mitigate citizens’ financial burdens with the demands of existing agreements, the government is grappling with a challenging decision. Notably, any attempt to counteract the price hikes could put the caretaker government in a precarious situation, as it might be perceived as a default on the International Monetary Fund’s (IMF) stipulations tied to a $3 billion standby agreement (SBA) loan.

    The depreciation of the rupee against the dollar has further fueled the need for these adjustments. With the dollar’s value reaching Rs301.75 in the interbank market and around Rs319 in the open market, the impact on petroleum prices is undeniable. The authorities have decided to recalibrate their calculations, opting for a dollar rate of Rs299 to account for the recent Rs12 exchange rate impact.

    Beyond the exchange rate, the recent surge in LC (letter of credit) confirmation charges, marked by a 10 per cent increase, has also played a role in pushing petroleum prices upwards. These charges have contributed to the overall increase in the cost of PSO (Pakistan State Oil) petroleum products. Presently, Mogas (motor gasoline) is priced at Rs290.45 per litre; however, this could rise by Rs12 per litre if the recommendations are greenlit. Similarly, the price of HSD (high-speed diesel) might surge from Rs293.40 per litre to Rs308.23 per litre, assuming the proposed Rs14.83 increase goes into effect.

    According to The News, of particular concern is the potential hike in diesel prices, given its primary use in powering heavy transport vehicles, trains, and various agricultural engines. This ripple effect could raise the cost of essential commodities, putting pressure on consumers’ wallets. 

    On the other hand, a surge in petrol prices would directly affect private transportation, rickshaws, two-wheelers, and small vehicles, disproportionately impacting the budgets of middle and lower-middle-class citizens. The impending decision on petroleum prices presents a delicate challenge for the government, requiring a careful balance between economic realities, inflation concerns, and public sentiment.

  • Weekly inflation increases to 27.5%, impacting household expenses

    Weekly inflation increases to 27.5%, impacting household expenses

    According to official data from the Pakistan Bureau of Statistics (PBS), the Sensitive Price Indicator (SPI) shows that inflation for the week ending on August 17 increased by 27.57 per cent compared to the same period last year. In simpler terms, things are getting more expensive.

    Looking at shorter periods, within a week, inflation went up by 0.78 per cent. This means prices are rising quickly and there’s no sign of them slowing down, which is worrying for both economists and consumers.

    Comparing some numbers, the overall price index was 275.57 on August 17, up from 273.43 on August 10 this year, and a significant increase from 216.02 on August 18 last year.

    Out of the things people buy, 32 items got pricier, 7 got cheaper, and 12 stayed the same. Among the things that became more expensive this week compared to a year ago were things like chillies powder (up 7.58 per cent), rice irri-6/9 (up 7.48 per cent), garlic (up 5.06 per cent), sugar (up 4.02 per cent), gur (up 3.23 per cent), and chicken (up 2.83 per cent). non-food items like diesel (up 7.29 per cent) and petrol (up 6.40 per cent) also got more expensive.

    On the flip side, the price of some things dropped. Tomatoes got 13.60 per cent cheaper, cooking oil (5 liters) became 1.65 per cent cheaper, and there were smaller drops in prices for things like vegetable ghee and wheat flour.

  • Car sales in Pakistan witness 57% decline in July 2023 compared to last year

    Car sales in Pakistan witness 57% decline in July 2023 compared to last year

    In the midst of ongoing economic uncertainty, the automobile sector has encountered a substantial decline in car sales, marking another significant setback.

    The most recent data released by the Pakistan Automotive Manufacturers Association (PAMA) unveils a noteworthy trend, with exclusive member carmakers collectively retailing a mere 5,092 vehicles during July 2023. This figure represents a notable downturn both in comparison to the previous month, with a 16 per cent decrease in sales, and to the same period last year, with a staggering 57 per cent reduction.

    Among the industry leaders, the Toyota Indus Motor Company (IMC) experienced a sales figure of 1,368 cars, indicating a 26 per cent reduction in sales on a month-on-month basis. On the other hand, the Honda Atlas Cars Limited (HACL) reported a sale of 494 cars, reflecting an unexpected 61 per cent surge in monthly sales. Meanwhile, the Pak Suzuki Motor Company (PSMC) encountered a decline of 19 per cent in its monthly sales, with a total of 2,444 cars sold.

    Hyundai Nishat Motors Private Limited (HNMPL) also made its mark by selling 569 cars in the past month, showcasing a modest 2 per cent increase in sales compared to the previous month. The resounding success of the Tucson model has been a driving force behind the company’s performance.

    While a slight uptick in sales has been witnessed, the overarching trajectory of the local car industry remains somber. Production disruptions persist as car companies grapple with inventory shortages, further exacerbated by the escalating prices and taxes that have curbed consumer demand.

    Experts caution that the challenges facing the industry are far from over, with more potential production obstacles and price escalations looming on the horizon. The road ahead continues to be a demanding one, requiring the industry to navigate through these formidable headwinds.

  • Car sales in Pakistan drop by 65% due to low purchasing power, supply chain disruptions

    Car sales in Pakistan drop by 65% due to low purchasing power, supply chain disruptions

    According to data from the Pakistan Automotive Manufacturers Association (PAMA), passenger car sales in Pakistan experienced a significant decline of 65 per cent in January 2023 compared to the same period the previous year. This was attributed to a shortage of raw materials, low purchasing power, and price surges.

    With the exception of Suzuki’s Swift, sales of all other variants of cars, trucks, buses, tractors, pick-ups, and three-wheelers, as well as two-wheelers, also dropped in January 2023.

    The seven-month sales data for FY23 showed a 43 per cent drop compared to the same period last year, with passenger car sales decreasing by 65 per cent to 6,021 units. In January 2023, engine-wise sales data showed that sales of 1,300cc and above cars were recorded at 4,207 units, down 55.5 per cent compared to the same period last year. Additionally, 1,000cc cars recorded sales of 1,214 units, a decrease of 55.2 per cent from the same period the previous year.

    In January 2023, sales of passenger cars with engines less than 1,000cc plummeted to 600 units, down 88 per cent from 4,820 units sold in the same period last year.

    Sales of Suzuki’s new Alto were particularly hard hit, dropping to 44 units from 3,864 units last year, as the company was unable to produce any due to raw material shortages. Commercial vehicle sales were also impacted, with buses and trucks declining to 470 units from 778 units in January 2022.

    Despite this, the sale of jeeps and pickups increased to 4,846 units from 3,625 units sold last year, largely due to an increase in sales of Honda BR-V and HR-V. Tractor sales, on the other hand, decreased to 3,406 units from 4,966 units in January 2022.

    Meanwhile, sales of rickshaws and motorcycles dropped to 109,558 units from 153,658 units in the same period last year. According to Topline Securities, Pakistan’s overall car sales, including those of non-PAMA members, stood at around 11,500 units, down 37 per cent from the previous month, primarily due to Pak Suzuki’s inability to produce due to the non-availability of CKD parts.

    In January 2023, the automotive industry in Pakistan experienced a 47 per cent year-on-year drop in sales, contributing to a 39 per cent decline in sales for the first seven months of FY23. According to Sunny Kumar, an analyst for Topline Securities, this is due to rising car prices, costly auto financing, and limited consumer purchasing power.

    Pak Suzuki (PSMC) was hit particularly hard, with sales falling to 2,946 units, the lowest level since April 2020, largely due to a credit letters issue. In contrast, Hyundai sales increased 81 per cent month-on-month, with Tuscon sales up 69 per cent and Sonata sales up 241 per cent in January 2023. In the tractor sector, Millat Tractors and Al-Ghazi Tractors recorded increased sales in January 2023 compared to the previous month.

    However, the industry’s overall sales have dropped by 53 per cent YoY to 14,919 units in 7MFY23, affected by floods, plant shutdowns, higher prices, and low consumer purchasing power.