Last year, the rates of sugar and flour were fixed at Rs47 and Rs30 a kilo, respectively, following intervention by the federal and Sindh governments. Sugar at present sells at Rs70-72 a kilo and flour at Rs36-38 per kg. The Sindh government, however, has launched a scheme under which a 10kg bag of flour is offered for Rs100, i.e. Rs20 per kg though only at especially set up stalls. Last year, a similar scheme offered flour for Rs10 per kg. Four millers have offered only Re1 per kg discount on their products at retail level in Ramazan.

Car sales have fallen 31.6 per cent in July as prices rose after the government increased the General Sales Tax (GST) to 17 per cent. Sales decreased to 9,796 units in July compared with the 14,320 units sold in June, according to data released by Pakistan Automotive Manufacturers Association (Pama) on Wednesday. The government in the federal budget increased GST to 17 per cent, a rise of one per cent. “The trend is the same every year,” commented Topline Securities analyst, Furqan Punjani. “Dealers do pre-buying in June ahead of the annual budget which tends to announce measures that increase the car prices,” said Punjani. This inflates the car sales figure in June and deflates the numbers in July, he pointed out. Pama data also revealed that 4,053 trucks and buses, 121,647 cars and 71,607 tractors were manufactured in the outgoing financial year that ended on June 30. During the last year, total car sales amounted to 123,957 units while 71,512 tractors and 4,277 trucks and buses were also sold. Manufacturing of motorcycles and three-wheelers stood at 736,861 units during previous financial year while sales in the same category amounted to 737,768 units.

Overseas Pakistanis sent home remittances worth $791.19 million in July, the first month of fiscal 2010-11, showing an increase of $46.34 million or 6.22 per cent over the same period of last year. In July 2009, remittances stood around $744.85 million. The inflow of remittances in July 2010 from Saudi Arabia, UAE, US, Gulf Cooperation Council (GCC) countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $194.94 million, $177.03 million, $143.87 million, $101.25 million, $85.57 million and $23.84 million respectively. Last year, the country had received the highest-ever amount of $8.906 billion in remittances compared with $7.811 billion received in FY09.

According to a map of the affected districts compiled by the United States Agency for International Development, the agricultural and industrial heartland of Punjab and Sindh has thus far been spared the worst of the flooding. While the impact of the flooding on Sindh has yet to be fully estimated, some analysts feel that reports of impending calamity overstate the potential damage. Production at most major oil and gas fields has either continued uninterrupted or been restored fully. Most private power plants, including Kot Addu Power Company’s plant, have managed to remain unaffected. While some publicly-owned plants have been affected, the impact of those has yet to be fully felt. Most of the major cotton-producing areas remain safe from the flooding, which is expected to inoculate the textile sector from the most severe of the impact from the flood. There has, however, been significant damage in several agricultural districts. As much as 1.5 million acres of agricultural land has been inundated by the flooding. This is likely to depress farmer incomes in the region and will likely have a spill-over effect on the rest of the economy. Nevertheless, most major highways are fully operational, which has led some observers to believe that food shortages should not become a major problem. Analysts expect the government to try to raise as much as Rs150 billion to deal with the crisis. This is likely to increase the budget deficit from the projected 4.1 per cent to closer to 6 per cent of GDP. While this is likely to constrain private sector borrowing even further than it already is – and may also impact inflation – it is also like to temporarily boost domestic demand even as private sector demand falls due to the economic afflictions of the flood victims. The cement sector in particular is expected to be boosted by any future government spending on infrastructure.

Lucky Cement Limited declared a lower-than-expected net profit of Rs3.1 billion, down 31 per cent on yearly basis. The profit has dropped solely because of lower prices of cement in both local and export markets during fiscal year 2010, said IGI Securities analyst Sana Abdullah.

Floods in Pakistan have destroyed about 500,000 tonnes of wheat, meaning a smaller surplus for the country this year, and also hit sugar and cotton supplies, agriculture officials said on Thursday. Flooding, which began two weeks ago on heavy rains, has also destroyed up to two million bales of cotton, industry officials said. Pakistan's output of refined sugar could also fall by 500,000 tonnes because of damage to the crop from the floods, a farmer association said. Pakistan, Asia's third-largest wheat producer, harvested 23.80 million tonnes of wheat in the 2009/10 crop.

According to PTA, Pakistan's leather exports from last few years are continuously decreasing. In 2008-09 the sector faced a sharp decline of 28 percent in leather goods export, while on the other hand Indian exports of the same commodity witnessed a 26 percent increase in the first six months of 2009. PTA Secretary General, Faheem Ahmed while talking to Business Recorder said that during fiscal year 2007-08, the country's export of leather goods stood at $1.15 billion, during 2008-09 at $943 million and during 2009-10 Pakistan's leather goods exports witnessed a further decline to $860 million. He said that the declining trend in the exports of leather products is alarming. These garments face stiff competition from Chinese and Indian products, he added. As per Federal Bureau of Statistics report, Pakistan's second biggest export-earning segment, leather and leather goods, witnessed an 18 percent fall during July-June 2009-10, as against the same period last year. During 2009-10 the country's leather exports went down by about 7.57 percent, leather garments exports declined by 12.53 percent, exports of leather gloves fell by 37 percent and exports of other leather-based goods slumped by about 31.60 percent.

The Finance Ministry is reportedly in conflict with the Ministry of Water and Power in seeking a concessional loan from the World Bank to keep the electricity tariff increases at a minimum for the low-income groups, sources close to the Secretary Economic Affairs Division told Business Recorder on Wednesday. The Finance Division, sources said, is of the view that the Ministry of Water and Power's proposal/request to the EAD to seek World Bank assistance to keep tariff increases at a minimum would not be in line with the GoP policy to eliminate subsidies.

The country witnessed a trade deficit of $1.451 billion in the first month (July) of current fiscal year against $1.171 billion in the same month of last year showing a surge of about 24 percent. Exports have shown about 22 percent (exact 21.83 percent) growth in July and reached $1.788 billion as compared to $1.4676 billion in the corresponding month of the previous financial year. However, imports depicted a growth of 22.7 percent to $3.2388 billion from $2.64 billion in July last year. Trade figures show exports have declined by 1.73 percent in July as compared to June 2009-10 when exports earned $1.8194 billion. Imports indicated 0.45 percent growth in July as compared to June. Trade deficit indicated 3.28 percent increase... The country's exports fetched $19.382 billion in 2009-10 as compared to $17.688 billion the year before, showing an increase of 9.58 percent despite an economic slowdown across the world. Sources said a number of measures are being proposed in the Trade Policy to encourage exporters who were deprived of announced incentives in Trade Policy 2009-10.