Packaged milk prices have increased by 25% due to new taxes

The recent increase in packaged milk prices in Pakistan, with a rise of Rs. 75 per liter, now priced at Rs. 370 per liter, has been attributed to various economic factors and new tax measures introduced in the federal government’s budget aligned with IMF demands. This price adjustment reflects an increase of 25% compared to the previous fiscal year’s rates. FrieslandCampina Engro Pakistan Limited, a major player in the dairy industry, has announced these price hikes citing rising production costs and the impact of economic factors on their operations. They detailed the new rates for Olper’s milk products, which include different prices for registered and unregistered retailers.

The government’s Finance Bill 2024 introduced an 18% sales tax and a 2.5% tax on retailers for milk products, aiming to generate significant revenue estimated at around Rs. 95 billion. This includes Rs. 75 billion from standard milk sales and Rs. 20 billion from infant milk items. While these increases are substantial, Finance Minister Muhammad Aurangzeb emphasized during his post-budget briefing that the middle class should not face undue difficulty in accommodating these tax adjustments on milk products. This move aligns with broader fiscal measures aimed at bolstering government revenues and meeting international financial obligations.