Amid growing inflation, the prices of branded Ghee and cooking oil in Pakistan have surged significantly, causing concern among consumers. Despite a global decline in palm oil costs, these essential kitchen staples have witnessed a hike of up to Rs100 per kilogram or liter, reaching Rs570 in some cases. Let’s explore the reasons behind this increase and its impact on the market.
Price Surge in Branded Ghee and Cooking Oil
Retailers have reported that the prices of branded cooking oil and ghee have increased by an average of Rs80 per kg/liter, with some premium brands seeing hikes of up to Rs100. This has left consumers questioning the reasons behind the sudden spike, especially when smaller manufacturers have slightly reduced their rates.
| Brand/Type | Price (Rs/kg or Rs/liter) | Price Change (Rs) |
|---|---|---|
| Branded Cooking Oil | 570 | +80 to +100 |
| Non-Branded Cooking Oil | 480–500 | -40 |
| Branded Ghee | 570 | +80 to +100 |
| Non-Branded Ghee | 470–500 | -40 |
Note: Prices may vary by region and retailer.
Highlights
- Branded Prices: Now stand at Rs570 per kg/liter.
- Small Manufacturers: Reduced prices by Rs40 per kg/liter.
- Market Share: Branded products make up only 5% of the market.
Palm Oil: A Crucial Component in the Price Equation
Pakistan heavily relies on palm oil imports to meet its local demand for ghee and cooking oil. Around 90% of the palm oil is imported from Indonesia, while the remaining 10% comes from Malaysia.
Import Statistics (July–November 2024)
| Commodity | Quantity Imported (Metric Tons) | Value ($ Million) |
|---|---|---|
| Palm Oil | 1.319 Million | 1.26 Billion |
| Soybean Oil | 74,385 | 73.647 |
The imports of palm oil rose by 7.13%, while soybean oil imports decreased by 10.01% compared to the same period last year. The rise in palm oil imports highlights its critical role in the cooking oil industry.
Why Have Prices Increased?
According to Sheikh Umer Rehan, Chairman of the Pakistan Vanaspati Manufacturers Association (PVMA), fluctuations in global palm oil prices are the primary reason. Here are the factors contributing to the price surge:
- Global Palm Oil Prices:
Prices surged to $1,285 per ton before settling at $1,185. This caused the local market price to drop from Rs19,000 per maund to Rs16,500. - Delayed Price Adjustments by Big Brands:
Branded products adjust prices more slowly due to logistical challenges like packaging and distribution. - Increased Import Costs:
The average price per ton of palm oil rose to $954 from $941 in the previous year.
Impact on the Consumer Market
While branded products dominate only a small portion of the market, their price hikes affect consumer spending patterns. Medium and small manufacturers, which hold a larger market share, have been quicker to adjust prices, offering some relief to consumers.
Role of Bilateral Trade in Stabilizing Prices
The Pakistan Vanaspati Manufacturers Association has urged Malaysia to reduce export duties on palm oil sent to Pakistan. This move could strengthen bilateral trade under the Free Trade Agreement (FTA) and potentially stabilize prices.
PVMA’s Proposal Highlights
- Duty Concessions: Requested from Malaysia to mirror Pakistan’s 15% concession.
- Palm Oil Projects: Collaborative plantation projects in Sindh proposed to boost domestic production.
Food Group Exports and Imports
Interestingly, while ghee and cooking oil prices have surged, Pakistan’s food group exports saw significant growth. Imports, on the other hand, declined, which may have contributed to inflationary pressures on local markets.
Data on Food Group Trade
- Exports (July–November 2024): Increased by 19.58%, reaching $3.155 billion.
- Imports: Declined by 11.13%, recorded at $2.977 billion.
Future Price Trends
Although international prices for palm oil have begun to stabilize, the effects on local branded products are expected to take time. As stated by PVMA Chairman Rehan, logistical delays in adjusting prices remain a challenge. However, gradual price reductions are anticipated as global markets stabilize further.
Consumer Perspective
With prices of essential commodities like ghee and cooking oil continuing to rise, consumers are exploring more affordable alternatives. Smaller manufacturers may see increased demand due to their competitive pricing.
- Explore Local Brands: Smaller brands offer better value.
- Monitor Price Trends: Stay updated on market shifts for potential savings.
Industry Expert
“Palm oil prices have seen significant fluctuations globally, but smaller manufacturers in Pakistan have responded quicker to these changes, providing some relief to consumers.”
— Sheikh Umer Rehan, Chairman, PVMA
The rising prices of ghee and cooking oil in Pakistan underscore the complexities of global trade and its impact on local markets. While international palm oil prices are stabilizing, logistical delays and market dynamics continue to challenge price adjustments. With efforts underway to strengthen bilateral trade and domestic production, there is hope for a more stable market in the near future. Until then, consumers and manufacturers alike must adapt to these changing economic conditions.
I am Fahad Munir, an experienced finance and prize bond analyst, provides reliable, up-to-date results, expert tips, and insights at BondResult.com to enhance your prize bond strategies
