Pakistan’s retail sector has witnessed a dramatic collapse in Eid Al-Adha season sales, with traders reporting declines of up to 60 percent compared to last year and blaming surging inflation and stringent taxation measures for the slump.
The three-day Eid Al-Adha festival, which coincides with the culmination of the annual Hajj pilgrimage, normally fuels a spike in economic activity as people purchase sacrificial animals, clothing, gifts, desserts and sweetmeats. Instead, traders say this year’s spending spree never materialized.
Kashif Chaudhry, president of the Central Association of Traders in Pakistan, said the business community had anticipated around Rs. 500 billion ($1.8 billion) in retail activity this Eid, which, together with livestock sales, was expected to push the overall Eid economy to roughly Rs. 1.4 trillion ($5.04 billion). Those projections, he added, have been shattered by the sharp fall in consumer turnout.
“Based on last year’s numbers, we were expecting at least Rs. 400-500 billion [$1.4-1.8 billion] in Eid-related business,” Chaudhry told Arab News, adding that ordinary commercial activity has shrunk by “at least 60 percent” this year.
Pakistan’s consumer price inflation jumped to 10.9 percent in April, up from 7.3 percent in March, as the ongoing confrontation between the United States and Iran pushed up fuel costs and disrupted supply chains. The resulting squeeze on household budgets has hit traditional retail hubs that rely on seasonal demand in sectors such as clothing, footwear, electronics, and festive foods.
According to Chaudhry, the sales estimates are derived from tracking inventory flows from manufacturers, importers, large factories and small producers against goods actually distributed to retailers.
Arab News said it was unable to independently verify the traders’ figures, and State Minister for Finance Bilal Azhar Kayani as well as finance adviser Khurram Schehzad did not respond to requests for comment.
Authorities in Islamabad have repeatedly defended tight fiscal and tax measures as unavoidable conditions under multi-billion-dollar International Monetary Fund (IMF) bailout programs designed to stabilize the economy. Business groups, however, argue that rapid tax reforms combined with a high policy rate — currently 11.5 percent — have choked domestic demand.
Chaudhry said the slowdown is visible from high-end retail outlets to mid-tier wholesale centers, leaving traders stuck with unsold Eid stock and struggling to service short-term credit obligations.
In Lahore, the country’s second-largest city, traders describe once-busy markets as eerily quiet. “Markets are deserted, there is silence everywhere, and sales have dropped to rock bottom,” said Zulfiqar Ahmad Bhatti, head of the Gulberg Traders Board, referring to thin crowds at Liberty Market, Al-Latif Center and other commercial hotspots.
He said daily wage earners making just Rs1,000-2,000 ($3.60-7.20) now face stark choices: “A person earning just Rs1,000-2,000 a day is forced to choose between buying petrol, paying children’s school fees, managing household groceries, or spending money on Eid shopping.”
In Karachi, Pakistan’s financial hub, the downturn has rippled through major supply chains and wholesale networks. Atiq Mir, president of the Karachi Tajir Ittehad, said commercial activity in the metropolis has fallen by more than 50 percent. “Shopkeepers are worried, while customers seem to have disappeared from the markets,” he told Arab News.
Mahmood Ahmad, a trader in Karachi, said there was a visible dearth of buyers in the city’s leading electronics and garments markets, which typically bustle with shoppers ahead of Eid. “This year the number of buyers appears to be very low in the electronics market, which is the largest in the country,” he said, adding that sales in the adjacent Cooperative Market’s garment section had also slowed “significantly.”
Retailers say inflationary pressures are being compounded by what they describe as aggressive tax enforcement by the Federal Board of Revenue (FBR), including mandatory installation of digital Point of Sale (POS) machines to monitor real-time sales. Many argue the measures have increased compliance burdens at a time when demand is already collapsing.
In Islamabad’s Blue Area, retailer Faaiz Jalil said shopkeepers have started cutting back on orders to avoid being stuck with unsold inventory. “I used to buy large stocks, now I buy less than half of that, thinking that if this gets sold then I will buy more,” he said, adding that current prices are unlike anything he has seen before: “There is extremely high inflation. I have never seen such inflation in Pakistan.”
Via: Arab News
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