As the PM plans subsidised chickens, eating poultry will cost more this winter

December 5, 2018

Photo: AFP

Chicken, it seems, will remain in the headlines for much longer than expected this winter. The prime minister’s programme to provide subsidized desi (organic) chicken to rural women has yet to kick off but eating farm chicken has already become expensive.

Prices of farm chicken increased by 44.5% in November compared to the same period last year, data from the Pakistan Bureau of Statistics revealed on Tuesday. Even when compared to the previous month, eating chicken was 15% more expensive in November.

Chicken falls in the perishable food category, which has 34.8% weight in the overall consumer price index (CPI) or basket of common goods and services. The PBS uses this basket to track the prices of essential items an average household consumes every day.

The headline inflation, general increase in prices, was recorded at 6.5% in November. This shows that inflation has slowed down compared to October when it reached 7%, its highest level of last four years.

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Among the commodities and services that saw the highest increase in price were gas (85%), soap (64%), bus fares (50%), diesel (33.5), movie tickets (33.4%), CNG (29.6), and petrol (28.7%).

This means from bathing to commuting outside the city and even watching a movie in the theatre, everything is going to cost more now compared to the same time last year.

In contrast, the price of vegetables, such as tomatoes, onions, green chilies, peas, potatoes and garlic, decreased in November compared to 2017.

In March 2018, the inflation rate was hovering around 3.25%, but prices have been going up since then. This is because of a rise in international crude oil prices and depreciation of the Pakistani rupee. The dollar is trading at Rs138 now, up more than 25% from Rs110 as of March.

The recent measures by the government, such as increasing gas prices have also pushed the prices further up. Gas comes under energy, which has 29.4% weight in the index.

Related: Government plans to impose “Sin tax” on cigarettes, tobacco

All these developments have increased the cost of production for companies, which then pass its impact onto consumers in the form of a price increase. For example, automakers increase prices when the rupee depreciates while fertilizer and cement companies also pass on the hike in gas prices to the consumers.

The government raised the price of gas because it is short on cash and cannot afford to subsidize losses of the gas sector anymore — the two main gas companies report losses of Rs152 billion per year. Just last week, the rupee witnessed another round of depreciation whose impact may reflect in the prices next month.

The inflation rate could reach 7.5% by June, according to a forecast by the State Bank of Pakistan, which raised its policy rate to 10% on November 30 to keep inflation under control.

 
 


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