LAHORE – Despite the government’s claims of a decline in inflation, sugar prices in Pakistan have risen sharply with the start of December 2024. Over the past 20 days, the ex-mill price of sugar has increased by Rs. 10 per kilogram, reaching Rs. 115 to Rs. 125 per kg. This price hike has been further compounded by retail shopkeepers, who have raised the price by Rs. 15 per kg, with sugar now being sold for Rs. 140 per kg, up from Rs. 125 per kg.
Unusual Price Surge During Crushing Season
Sugar dealers have expressed concern over this price increase, noting that it is unusual for sugar prices to rise during the ongoing crushing season. This season typically sees increased production, which would usually help stabilize prices. However, dealers believe an artificial shortage is being created by spreading rumors about a significant reduction in sugar production compared to last year.
Impact of Sugar Exports
One factor contributing to the price hike is the export of sugar. The government had allowed the export of 790,000 tons of sugar, and of this, 377,000 tons have already been exported. This has reduced the domestic supply, pushing up prices. Additionally, the production from sugar mills has been lower than expected. In the last two weeks of November, the daily production from sugar mills was only 13,000 tons, while the country’s daily consumption stands at 18,000 to 20,000 tons.
Looking Ahead
The combination of reduced domestic production, increased exports, and rumors of a shortage has led to an upward spiral in sugar prices, affecting consumers and creating further challenges for the government. It remains to be seen how the government will address the artificial shortage claims and manage both domestic consumption and exports to stabilize prices.
