By Uwin Lugoda
The dollar crisis, shipping rates, state policies, and fluctuating prices in both international and local markets have been blamed for the recent hikes in commodity prices locally.
The Government termed the recent price hikes of commodities, such as dry rations, a circumstantial event rather than one brought on by the recent removal of price controls.
Speaking to The Sunday Morning, State Minister of Co-operative Services, Marketing Development, and Consumer Protection Lasantha Alagiyawanna stated that this was due to various factors impacting both imported dry rations and those manufactured locally.
‘Price control removal only brought prices down’
Alagiyawanna argued that the prices of items such as rice, wheat flour, dhal, etc. were being impacted by the increasing dollar rate, shipping costs, and prices in both international and local markets.
“The prices did not go up just because we removed the price controls. Most of these are imported products and are impacted by the dollar rate, shipping charges, and international market prices, so the increase in these led to an overall price increase.
“Then, when we look at dry rations being grown here, such as rice, the farmers have increased their market price from Rs. 32 a kg to Rs. 70 a kg, which also led to a price increase for the end consumer,” Alagiyawanna opined.
He claimed that the prices of these dry rations were high before the Government decided on implementing price controls, and their removal only brought these prices down. He explained that consumers were being sold a kg of rice at Rs. 200 to Rs. 260 before the removal of price controls, and these prices had now reduced to Rs. 140 per kg.
“The removal of the price controls brought the prices down, and we expect it to reduce further with the increase of competition in the international market. Until then, we are monitoring the situation closely, and if there are unfair price hikes, we will get involved and ensure no one is charged unfairly,” he added.
Two sides of a coin
Despite Alagiyawanna’s claim of prices having reduced, data from the Department of Census and Statistics showcase varying price changes following the price control removals on 4 November.
Prices of wheat flour (0.1%), dhal (0.3%), chickpeas (0.1%), and raw white rice (3%) had increased, while the prices of red rice No. 2 (-2.9%) and green gram (-1.2%) had reduced.
The Government chose to abandon its policy of price controls earlier this month, due to the shortages caused by it. Alagiyawanna stated that this scarcity issue had now been addressed, with only fuel being the exception due to it being tied to the dollar.
“We had a lot of scarcity when it came to things like milk powder and rice. But, after the removal of price controls, we no longer have this problem. So now, we only have the problem of the price hikes, which we want to address by reducing the prices further, but the increasing market cost, shipping cost, and dollar rate have made it unfeasible.”
Speaking to The Sunday Morning, Consumer Affairs Authority (CAA) Chairman Maj. Gen. (Retd.) Shantha Dissanayake assured further that the situation was being monitored closely to ensure consumers were not being unfairly charged for these dry rations.
An overdependence on imports
However, Consumer rights activist Asela Sampath blames a lack of a robust mechanism to manage supply chain issues, pricing, and a dependence on imports for the price hikes.
Speaking to The Sunday Morning, he said that for the past 70-plus years, the country’s governments and politicians had not introduced proper regulations to ensure the public’s daily requirements were met, which has led to the issues we face today. He explained that if Sri Lanka’s leaders introduced a mechanism to grow these commodities locally and only imported items that could not be produced locally, international prices, shipping prices, and the dollar would not have had a major impact on dry ration prices.
“We can't build a national economy because there is no national production. It's not because we can’t do it – we have fertile soil. Rather, it’s because the authorities in charge have not introduced any studies or mechanisms for our people to follow. If we introduce such things at the village level, we can control our price increases, instead of having external factors determine them,” said Sampath.
He stated that the Government had essentially handed over price controls to the middleman, who is the only one making a profit, leaving both farmers and consumers poorer. He stated that this led to even the average meal being very expensive.
“The people most affected by this are the lower middle class and working class people. People who used to spend Rs. 1,000 on their dry rations are now spending Rs. 4,000, and they cannot even get their leafy vegetables because of the fertiliser issue.”
Sampath stated that consumers are left helpless, while politicians and the middlemen profited. He alleged that the politicians were unable to control these prices because they might be getting a commission from these middlemen to do so.
“We had a commissioner for price controls appointed by the President, we have the CAA, a Minister, and a State Minister, and they still can’t control the market,” Sampath opined.
Prices of dry rations skyrocket in 2021
Local dry rations saw a major price hike in the past few months when compared to the start of 2021.
According to data from the Department of Census and Statistics, the prices of dry rations such as wheat flour, rice, green gram, dhal, chickpeas, and milk significantly increased this year.
Wheat flour, which was Rs. 98 per kg in the first week of January, increased by 26% by the second week of November, reaching Rs. 123.53 per kg. This is also a 31.6% increase from November last year, when it was Rs. 93.86 per kg.
Raw white rice, which was Rs. 103.81 per kg in the first week of January, increased by 28.1% by the second week of November, reaching Rs. 133.04 per kg. This is also a 35.3% increase from November last year when it was Rs. 98.34 per kg.
Green gram, which was Rs. 447.88 per kg in the first week of January, increased by 47.3% by the second week of November, reaching Rs. 660.02 per kg. This constitutes a 51.5% increase from November last year, when it was Rs. 435.77 per kg.
Dhal, which was Rs. 188.08 per kg in the first week of January, increased by 41% by the second week of November, reaching Rs. 265.27 per kg. This is a 45.5% increase from November last year when it was Rs. 182.37 per kg.
Meanwhile chickpeas, priced at Rs. 256.43 per kg in the first week of January, increased by 37.1% by the second week of November, reaching Rs. 351.77 per kg. This is also a 37.8% increase from November last year when it was Rs. 255.23 per kg.
Finally, all milk powder brands increased by 23-26.3% since January this year. The majority of these prices were unchanged since January 2020.
| Item | Price in 1st week of Jan. 2021/kg | Price in 2nd week of Nov. 2021/kilo | Price in 2nd week of Nov. 2020/kilo | Price increase since Jan (%) | Price increase since Nov 2020 (%) |
| Wheat flour | Rs. 98 | Rs. 123.53 | Rs. 93.86 | 26% | 31.6% |
| Raw white rice | Rs. 103.81 | Rs. 133.04 | Rs. 98.34 | 28.1% | 35.3% |
| Green gram | Rs. 447.88 | Rs. 660.02 | Rs. 435.77 | 47.3% | 51.5% |
| Dhal | Rs. 188.08 | Rs. 265.27 | Rs. 182.37 | 41% | 45.5% |
| Chickpeas | Rs. 256.43 | Rs. 351.77 | Rs. 255.23 | 37.1% | 37.8% |