Tea Prices Set to Rise in Pakistan as Sales Tax Increases

Following significant hikes in oil, ghee, and sugar prices, tea importers and packers in Pakistan are preparing to raise prices by Rs 100 to Rs 200 per kilogram. This increase comes in response to the Federal Board of Revenue’s (FBR) recent announcement to elevate sales tax rates on both local and imported tea.

The FBR has issued S.R.O. 1735(1)/2024, establishing a minimum retail price of Rs 1,200 per kilogram for tea to facilitate sales tax payment. This adjustment is expected to further burden consumers already grappling with rising costs of essential goods.

Local manufacturers and importers are known to pass on increased operational costs, including government-imposed taxes, directly to consumers. “When the government raises taxes, we have no choice but to adjust our prices accordingly,” said a representative from a local tea packaging company.

Industry experts caution that this trend of price increases could lead to reduced consumption, exacerbating the economic challenges faced by consumers. “As prices rise, many will be forced to cut back on non-essential items, including tea,” warned an economic analyst.

The FBR’s decision has drawn criticism from consumer advocacy groups, which argue that it disproportionately impacts low-income households. With inflation continuing to strain household budgets, the hike in tea prices is expected to add to the financial pressures faced by many Pakistanis.

Data revealed that black tea consumption in Pakistan has been estimated at 1,72,911 tonnes which is expected to increase to 2,50,755 tonnes in 2027, the FAO report projects. This showed in next 10 years, tea consumption will increase by 77,844 tonnes.