Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Eid shopping sees sharp drop as Pakistanis feel inflation pinch

Published 20/04/2023, 15:55
© Reuters. People look at handbags on display outside shops in a market, ahead of Eid al-Fitr celebrations in Karachi, Pakistan April 19, 2023. REUTERS/Akhtar Soomro
SHCAY
-

By Ariba Shahid and Mubasher Bukhari

KARACHI, Pakistan (Reuters) - Retail sales in Pakistan have witnessed a sharp drop compared to previous years in the run up to the Muslim holiday of Eid al-Fitr, retailers say, as shoppers feel the pinch of decades-high inflation.

The lead up to Eid al-Fitr, expected to fall on Saturday in Pakistan to mark the end of the holy month of Ramadan, traditionally sees the highest sales of the year. But this year, the country is in the midst of a crippling economic crisis.

"There has been a 20% reduction in sales across all categories except women’s clothing," Tariq Mehboob, chairman of the Chain Store Association Pakistan (CAP) and CEO of Royal Tag, a clothing brand for men, told Reuters.

Inflation clocked in at 35% in March, fuelled by a depreciating currency, a rollback in subsidies, and the imposition of higher tariffs to secure a bailout package of $1.1 billion from the International Monetary Fund.

Food inflation has risen to more than 47%, and even the wealthier professional class is making lifestyle changes to deal with rising prices.

"Pakistanis have lost more than 50% of their wealth in the last two years in the form of depreciation, so you’re now selling to people with 50% less available funds, while the cost has gone up 100%,” said Asad Shafi, owner of female clothing brand Cross Stitch.

"The expectation of fashion retailers is so low that even meeting breakeven or bare minimum sales just to stay alive is acceptable," he added.

Asfandyar Farrukh, co-founder of CAP and managing director of Hub, a leather goods store, said that Eid shopping appears to have started sooner and peaked earlier, coinciding with salary pay days, and customers anticipating price increases.

"Established brands are not seeing as big a drop in revenues as local markets as they are frequented more by upper-middle and upper-income customers," says Farrukh.

Usually bustling markets and shopping centres targeting the middle and lower middle class such as Anarkali and Liberty Market in the eastern city of Lahore have both reported fewer customers.

Ashraf Bhatti, president of the Anarkali Traders Association, told Reuters that there had been a 50% reduction in Eid shopping this year, while Sohail Sarfaraz Mani, President of Liberty Market Traders Association, estimated the drop had been around 35%.

© Reuters. People look at handbags on display outside shops in a market, ahead of Eid al-Fitr celebrations in Karachi, Pakistan April 19, 2023. REUTERS/Akhtar Soomro

The sales drop adds to the slowing of Pakistan's $350 billion economy, which has struggled in recent months amidst tough stabilisation polices, including the central bank raising interest rates to a historic high of 21%.

Pakistan expects its economy to grow 2% during the current fiscal year; however, in April, the World Bank slashed Pakistan's growth projections from 2% to 0.4%.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.