Pakistan imposed a milk tax, now the dairy staple costs more in Karachi than Paris

Milk prices in Pakistan surged by more than a fifth after a new tax was applied, making the dairy staple more expensive than in France, Australia and some other developed nations.

Ultra-high temperature, or UHT, milk now costs 370 rupees ($1.33) a liter in supermarkets in Karachi. That compares with $1.29 in Amsterdam, $1.23 in Paris, and $1.08 in Melbourne, according to data collected by Bloomberg. An 18% tax was applied to packaged milk as part of taxation changes approved in the national budget last week. Previously, it was tax-exempt.

Before the impost, which resulted in retail prices increasing by as much as 25%, milk costs were comparable with developing countries such as Vietnam and Nigeria, said Muhammad Nasir, a spokesman for the local unit of Dutch dairy producer Royal FrieslandCampina NV.

Costlier milk will add to rising inflation in the South Asian country, where wages have stagnated, eroding spending power. The increase may also worsen child health. About 40% of the nation lives in poverty.