Food and clothing: Prices keep rising, but consumption rises faster

Pakistanis are eating more food and buying more clothes, and not caring about inflation.

Farooq Tirmizi July 29, 2012


Pakistanis are increasingly spending more and more money on food and clothing, and it is not just because prices are rising: the data now shows that they are buying higher volumes, particularly in food.

In an analysis conducted by The Express Tribune using data generated by the Pakistan Bureau of Statistics, it is becoming increasingly evident that even though prices of food and clothing have skyrocketed over the past decade, the ability of most Pakistanis to keep buying has – for the most part – kept pace (though for some income groups, that has come at the expense of their ability to save).

Between 2002 and 2011, food prices have increased at an average rate of about 11.2%. Spending on food, however, has risen by over 12% per year during that same period. That may not sound like much of a difference, but that means that the average household consumes 6.8% more food than it did a decade ago. Factor in the fact that the average household size has declined during that time and one gets the following statistic: the average Pakistani consumed 17.2% more food in 2011 than they did in 2002.

This massive expansion of food consumption, meanwhile, has fuelled a boom in the sector. Food companies listed on the Karachi Stock Exchange saw their revenues more than double between 2006 and 2010. During that same period, their pre-tax profits more than tripled.

An increased sign of prosperity is also the fact that Pakistanis now buy more meat: expenditure on meat, fish and poultry now constitutes about 10% of all spending on food, up from 9.3% a decade ago. The fastest rise has been in poultry. Pakistanis have increased their per capita consumption of chicken by about 130% during this past decade. This is despite the fact that prices of chicken have shot up 120% during that same period.

It is this dual expansion of per capita consumption and prices that has resulted in the more visible competition among food companies to advertise their products to consumers.

The story in clothing and footwear expenditures is also interesting. The difference in total spending and price rises, at first glance does not appear to be much. Between 2002 and 2011, spending on clothes and footwear rose by 7.4% per year, while prices rose by 7.2% per year. Yet, given the decrease in household size, the per capita volume of clothes bought by Pakistanis increased by nearly 11% during that period.

The fortunes of clothing companies have similarly soared. Between 2006 and 2010, the local sales revenues of clothing manufacturers listed on the Karachi Stock Exchange jumped by an average of 29% per year, much faster than even their own export sales, which rose by about 22% per year during that period. Profits have more than quadrupled during that time.

And those figures precede the recent boom in lawn sales. Sources in the advertising industry say that more than 100 brands of lawn clothing carried out advertising campaigns in 2011 alone.

There has also been a very significant change in buying behaviour: the fastest increase in demand has been for readymade clothing, with a decline in the relative importance of tailored clothes. The average demand for such clothes has increased by an astonishing 81% during the past decade, which suggests that far more Pakistani consumers prefer the convenience of buying off the rack rather than spending time haggling with tailors.

Published in The Express Tribune, July 30th, 2012.

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