Packaged Milk Prices Jump Due to New Taxes

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Packaged milk prices in Pakistan have surged by Rs. 75 per liter (25%) following the implementation of the new budget. This increase is attributed to a combination of factors:

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  • Milk tax increase: The government imposed an 18% sales tax on packaged milk, along with an additional 2.5% tax on retailers.
  • Rising production costs: Dairy companies like FrieslandCampina Engro Pakistan Limited cited economic pressures and increasing production costs as reasons for their own price hikes.

The combined new taxation effect significantly increases the cost of packaged milk. A liter of milk that previously cost Rs. 295 now retails for Rs. 370. This increase is expected to impact other companies as well.

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The government also proposed an 18% tax on infant milk formula under Rs. 600 per 200g. While the total revenue generated from these new taxes is estimated to be around Rs. 95 billion, concerns remain about the affordability of these essential goods, especially for low-income families.’

Despite these considerations, Finance Minister Muhammad Aurangzeb expressed confidence that the middle class will be able to manage the increased cost of milk due to the new taxes.

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