Milk prices in Pakistan have jumped by over 20% because of a new tax. As a result, milk in Karachi is now more expensive than in cities like Paris, Melbourne, and Amsterdam.
In Karachi supermarkets, Bloomberg data shows that ultra-high temperature (UHT) milk costs 370 rupees ($1.33) per liter. It costs $1.23 in Paris, $1.08 in Melbourne, and $1.29 in Amsterdam.
The price hike happened after the government imposed an 18% tax on milk, which was previously tax-free. This new tax policy, part of the recent national budget, has significantly increased milk prices.
Muhammad Nasir, a spokesperson for the local branch of the Dutch dairy company Royal FrieslandCampina NV, mentioned that milk prices in Pakistan used to be similar to those in developing countries like Vietnam and Nigeria before the tax. The new tax has caused a retail price increase of up to 25%.
The rising milk prices are likely to worsen inflation in Pakistan, where wage growth has stalled and purchasing power is dropping. The recent budget, which included a historic 40% tax increase, aims to meet the conditions set by the International Monetary Fund for a new bailout package.
