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Turning the spotlight to non-essentials goods

2 years ago

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  • Industry stakeholders open up about challenges
By Imesh Ranasinghe While the prices of rice, vegetables, and other essential food items were constantly fluctuating since the beginning of 2021, the prices of some other small good items that also play an important role in a Sri Lankan household were also seen going up, for which, however, the people didn’t raise their concerns. If it is the prices of rice, gas, or milk powder that go up significantly, people would probably talk about it during a random chat with the neighbours or colleagues at the workplace while some would take it to social media. But recently, pictures of these “small good items”, which are manufactured within months or even weeks, were compared to show how their prices have increased, and these social media posts went viral on the internet where even some of the local newsrooms shared them on their social media platforms. What social media posts showed Some of the pictures shared on social media showed the price of a 400 g Nestomalt packet manufactured on 16 February 2021 at Rs. 150 against the price of a 400 g Nestomalt packet manufactured on 26 March 26 2021 at Rs. 160, which by the month of May went up to Rs. 165. The Sunlight laundry bar, famous among Sri Lankan households for decades, went up to Rs. 60 by 9 July from Rs. 55 on 28 April. Biscuits products like the 490 g Munchee Super Cream Cracker that was priced at Rs. 220 on batches manufactured on 13 June went up to Rs. 240 by 23 June, while a 360 g Supiri Mari biscuit packet went up from Rs. 160 on 12 June to Rs. 180 by 25 June. The National Consumer Price Index (NCPI) that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, was seen increasing from January to June 2021, from 3.7% to 6.1 %, respectively. However, it was recorded at 5.7% in the month of July, according to data from the Department of Census and Statistics (DCS). The higher Inflation rates were the result of the money printing policy adopted by the Government when Covid-19 hit the economy and not just the health of the people. In 2020, Rs. 650 billion was printed by the Central Bank of Sri Lanka (CBSL), and with two reserve ratio cuts, only a part went to fill a need of public currency holdings. The rest flowed out as a $ 2.3 billion balance of payments deficit while about Rs. 200 billion was left as excess liquidity by the first week of January. Part played by Consumer Authority However, following these comparison pictures of small good items, many people started questioning the role of the Consumer Affairs Authority (CAA) that should protect the consumer, and the general question among the people is how can companies raise prices within weeks in such a manner. Speaking to The Sunday Morning Business, CAA Executive Director Thushan Gunawardena said that many of the said good items that received attention fall under non-essential goods, which means their prices will not be regulated by the CAA. “If it is under any essential item, then yes, we (CAA) will regulate. There is a fixed price, but if it’s not an essential item, the prerogative is with the respective company,” he said. However, he said if the products were falsely marked with different prices or if the ethics of marketing are violated, the authorities can get involved in the matter, regardless of whether it is an essential or non-essential item. Some of the goods that fall under essential goods in Sri Lanka include liquefied petroleum (LP) gas, white sugar, rice, dhal, wheat flour, canned fish, big onions, dried chilies, turmeric powder, and gram. Company responses In an email response, Nestlé Lanka PLC Vice President of Corporate and Regulatory Affairs Bandula Egodage said the company has been reluctantly compelled to increase the prices of some of its products due to continued cost increases. He said that while every effort is taken to absorb as much of the cost increases as possible, the  minimum possible cost increase is passed onto the consumer as a last resort. However, in the case of a continuous increase of costs, he said every effort will be taken to mitigate the cost increases through cost-saving initiatives and operating efficiencies across the value chain. Also responding to an email query, Unilever Sri Lanka Ltd. Corporate Communication Manager Neluka Wikramanayake said that as a company that has been deeply rooted in Sri Lankan society for over 83 years, the consumers have always been at the heart of everything Unilever Sri Lanka does. Explaining reasons behind the recent price increases, she said the decision was made due to the macroeconomic situation, demand-supply factors, and elevated pressures in raw material costs seen in the market. “In this environment, our priority will always be to provide value to our consumers and invest behind our brands. As such, we will deploy our entire tool kit of mix, net revenue management, and savings to sustain our business model,” she added. A response could not be obtained by Ceylon Biscuits Ltd. (CBL) on the matter at the time the paper went to print. Supply chain difficulties Supply chain management consultant Denver Brian Coorey said that all supply chains have miserably failed due to the Covid-19 pandemic. He said there is delay in getting raw materials required for production in the country due to serious restrictions imposed by the Government. These delays in supply chains have also contributed to the increase in prices of many goods following the demand. “Currently, we have a very pathetic situation in importing raw materials for food, pharmaceuticals, and everything because you are not allowed to open LCs (Letters of Credit) to make payments to banks by telegraphic transfer payments. So, all are getting delayed,” he explained. Furthermore, he said most of the raw material, food ingredient, and food additive suppliers have stopped producing due to the pandemic. Coorey, who runs Suveen Trading, a trading company of raw and packing material, sourcing from the world’s most reputed manufacturers and traders, said there is a delay in transporting goods such as food additives from foreign markets in China, India, and Europe. “In my own company, some raw materials are getting delayed not by one or two weeks, but by more than two months. Therefore, here the production is held up,” he added. Moreover, he said due to the pandemic, the production levels in the country have gone down due to absenteeism from production lines.

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