The prices of several food items, including popular beverages and processed edibles, are likely to surge by up to 50 per cent in the upcoming federal budget 2025-26.

Sources within the Federal Board of Revenue (FBR) said that a significant rise in federal excise duty (FED) is under consideration for sweetened beverages, including soft drinks, juices, and carbonated soda water. The proposed duty is expected to increase from the current 20 per cent to 40 per cent.

The proposal includes products containing additional flavouring agents or artificial sweeteners, a move aimed at discouraging consumption of sugar-rich and non-essential food items. Syrups, squashes, and carbonated water made from fruit juice or pulp are also likely to fall under the revised tax net.

FBR officials further revealed that a new 20 per cent tax may be imposed on various industrially produced dairy-based products. This includes milk-based items that are processed and packaged for commercial sale.

Moreover, meat products such as sausages, as well as dried, salted, or smoked meat, are expected to witness a price hike due to proposed revisions in tax slabs.

A sweeping increase in taxes—reportedly up to 50 per cent—is also on the cards for a range of processed foods, including chewing gum, chocolates, candy, caramels, pastries, biscuits, cornflakes, and other cereals. Bakery items are also likely to be affected by the increase.

The upcoming budget may also raise taxes on desserts and fat-based food products, such as ice cream, flavored or sweetened yogurt, frozen treats, and other items made from either animal or vegetable fat. These tax hikes will reportedly be implemented gradually, with a cumulative increase of up to 50 per cent over the next three years.

The move comes as Islamabad remains under pressure from the IMF to broaden its tax base and reduce fiscal deficits, key conditions for securing further tranches under the ongoing loan programme.

While the government maintains that the increase is part of efforts to rationalise consumption and boost public health, stakeholders from the food and beverage industry warn that such measures could lead to reduced production, job losses, and greater inflationary pressure on households.

The final decision is expected to be announced in the federal budget for the fiscal year 2025-26, scheduled to be presented in June.