Pakistan is likely to import tea directly from Bangladesh to bring down prices in the local market, sources close to Finance Minister told Business Recorder. The government considered this option at a recent cabinet meeting presided over by the Prime Minister, Syed Yousuf Raza Gilani.
Foreign trade figures show that Pakistan imported 94,252 tons of tea at a cost of $261 million during the first 9 months of current fiscal year against the 70,000 tons worth $202 million in the same period last year. These figures indicate that tea import this year is 29 per cent more than the same period last year. Currently, key tea importing countries are Sri Lanka (with which Pakistan signed first Free Trade Agreement) and Kenya.
"Cabinet has agreed that the Finance Division should consider the option of direct import of tea from Bangladesh to bring down the tea prices to an affordable level," disclosed official documents available with Business Recorder. The cabinet was briefed on the current Consumer Price Index (CPI), which determines changes in the price of essential commodities.
Finance Ministry's top brass stated that the CPI has been calculated as 13 percent for April 2011, while inflation has been recorded at 17.2% and 9.5% in respect of food items and non food items respectively and the inflation rate during July to April of the current year averaged 14.1% as against 11.5% in the comparable period of last year.
The food inflation climbed to 18.4% and non-food to 10.4 percent. The current price hike reflected by the Sensitive Price Indicator (SPI) for last nine months (July-April) suggests that the uptrend in prices during this period stemmed mainly from a limited number of food items, like tomatoes, onions, eggs, chicken (farm), wheat flour, mutton, beef, moong pulse, gram pulse, red chillies, vegetable ghee (loose), fresh milk and vegetable ghee etc.
It was also stated that the prices of essential items in Pakistan are showing resilience and affordability, as compared to other countries in the region. Finance Minister briefed the cabinet on the measures to control inflation, which included reduction of fiscal deficit through fiscal policy, keeping interest rates high through monetary policy, breaking of cartels, administrative measures by federal and provincial governments, creating strategic reserves of essential commodities to overcome shortages during Ramazan and off-season, control of localised shortages by improving logistics and measures to reduce the impact of increased international prices, particularly of petroleum and food products.