Ghee and Cooking Oil Prices May Increase by Rs10–15 Per Kg After New Tax Changes, Warns PVMA

Consumers in Pakistan could soon see a fresh increase in the prices of ghee and cooking oil, as the Pakistan Vanaspati Manufacturers Association (PVMA) has warned of a potential hike of Rs. 10 to Rs. 15 per kilogram.

The association attributes the rise to recent changes in the sales tax mechanism in the federal budget which may directly affect production costs and retail prices.

Sales Tax Change Behind Expected Price Pressure

PVMA Chairman Sheikh Umer Rehan said that if the Third Schedule was incorporated in the budget, the system will move towards a maximum retail price-based sales tax regime.

He said the change in the setup would have a big impact on the tax rates for the industry, which would then filter down to the final retail prices of basic cooking commodities for consumers.

Industry Says Cost Burden Will Be Passed to Consumers

Rehan said that the edible oil industry is already overburdened and facing high operating costs. He expressed concern that further taxation would ultimately have to be borne by consumers.

He added, “Production-level prices will go up, in turn raising retail prices of ghee and cooking oil, as the costs do.”

PVMA Flags Risk to Price Stability in Market

The association also warned that the new taxing process would negatively impact the current pricing dynamics in the market.

The new system would use maximum retail price to work out taxes, something PVMA says would raise the overall cost to manufacturers and make it harder to ensure prices were stable up the supply chain.

Consumers May Face Inflation Pressure

The policy adjustment, if enforced as it stands, may put additional strain on already hard-up households, especially those purchasing essential food commodities such as ghee and cooking oil, which are common in Pakistan.