Rising cost of living: Increasing burdens on consumers

  • Minimum expenditure per person per month increases to over Rs. 5,000
  • Govt. has limitations in controlling rising cost of living: Trade Minister
  • Importers’ and consumer rights groups express concerns

By Yoshitha Perera

In the wake of the Covid-19 pandemic and a foreign exchange crisis, the topic of cost of living and its impact on the livelihoods of people has once again taken centre stage.

According to the recent statistics released by the Department of Census and Statistics (DCS), the official poverty line at national level for June 2021 is stated as Rs. 5,312, which is the minimum expenditure per person per month to fulfil their basic needs.

With the present price hikes of almost every essential commodity in the global market and the current dollar crisis in the country, importers and consumer rights groups shared their concerns over several issues.

Importers and consumer rights groups concerned

Sharing views with The Sunday Morning, Essential Food Commodities Importers’ and Traders’ Association (EFCITA) President G. Ragendran said that with the fluctuation of the dollar rate, insufficient forex, and the gradually worsening economic situation in the country, the price of every essential commodity has increased within the past few months.

“The prices of all the essential food items are moving up, as per the fluctuation of the dollar rate. I can say the world market has drastically gone up with certain commodities like lentils, since there is a severe shortage in Canada owing to climate change,” he said.

Rajendran further added that sugar prices have also gone up since the importation ban and warned that Sri Lankans will have to find alternatives for sugar if the ban continues further.

“There is insufficient production of sugar in Sri Lanka and the Government basically thinks it is not essential. We have to understand that we cannot depend only on the sugar production in Sri Lanka since many food factories need a considerable amount of sugar,” he pointed out.

He said that it is important to import sugar since local production doesn’t cover even 10% of the domestic demand.

Meanwhile, the Bakery Owners’ Association last week announced that the price of bakery products will be increased from Monday (23). Accordingly, a loaf of bread will be increased by Rs. 5 and other bakery products by Rs. 10 each.

Speaking to The Sunday Morning, National Movement for Consumer Rights Protection (NMCRP) Chairman Ranjith Vithanage said the prices have been increased mainly in sugar, dhal, tinned fish, and milk powder.

“There is a shortage in the market for tinned fish and milk powder, and the main issue is that the prices of non-essential items have also been increased on a monthly basis. Earlier, there was a control of the price hikes when it comes to soap, washing powder, tooth brushes, etc., but in the present situation, the prices of those items have also increased monthly,” he said.

Consumer rights activist Asela Sampath noted that due to price increase of the loaf of bread to Rs. 70, the consumers will have to pay Rs. 150 for a simple dhal curry and half a loaf of bread from next Monday onwards.

“The President has to pay serious attention to this matter and provide relief to bakeries and bakery shop owners. If these solutions are not imposed in a timely manner, the price of a plain tea will also have to be increased to Rs. 25.”

‘Govt. taking all possible steps’

In this context, sharing views with The Sunday Morning, Minister of Trade Bandula Gunawardana said that all developing countries in the world are in the middle of a crisis situation, and at present, the Sri Lankan Government is trying to control the factors that control the cost of living.

“Since there is a developing crisis with the country’s foreign exchange, the Government has certain limitations when it comes to controlling the rising cost of living. Yet, the Cabinet and the Cabinet Subcommittee on Cost of Living are paying special attention to this matter,” he said.

Adding that rice is the staple food of Sri Lanka, Gunawardana said the main issue with the increasing price is the overactive rice mafia in the county.

“At present, there are a large number of middlemen who collect stocks of rice by paying higher prices for paddy. During the former Yahapalana Government’s tenure, paddy farmers received only Rs. 30 and with the present Government, and then it was increased up to Rs. 50. Yet, the middlemen further complicated it,” he explained.

Explaining the recent decisions taken by the Government to control the rice mafia and the rising cost of living, the Minister of Trade stated that on Tuesday (17), the Cabinet had decided that if rice stocks collected by intermediaries are not registered under the Consumer Protection Act, the Government would purchase those rice stocks and distribute it to the consumers via Sathosa and Co-operative outlets.

He also said that if the maximum retail price (MRP) is exceeded, the existing fine will be increased to Rs. 100,000, adding that a gazette notification including the new fine has been issued on 18 August, after the Cabinet approved the decision.

“We will continue to provide rice for less than Rs. 100 over the next three years,” he said.

Gunawardana further stated that there are goods that are not manufactured in the country, such as dhal and peas, and the production of certain items such as sugar, potato, onion, and chilli is insufficient.

According to the Minister, the Sri Lanka State Trading (General) Corporation plans to initiate steps to import new products, mainly essential food items, in the future and distribute them among consumers through the Sathosa network.

“Until now, all goods were imported with the assistance of the private sector; yet in the future, steps will be taken to import all essential commodities through a government agency and discussions in this regard are underway,” he assured.

Minister Gunawardana also added that arrangements have already been made to deliver 20 essential items such as rice, flour, sugar, tea, and lentils, amounting to Rs. 1,998,  as a relief package to homes within 24 hours via the 1998 hotline. He said the Sathosa administration and its staff are currently working hard to accomplish this task.

Explaining that the Sathosa outlets would be increased to 600, Gunarwardana said the necessary measures are being taken to make this network the largest retail chain in Sri Lanka in the future.

Essential goods to be supplied amid lockdown

Trade Minister Bandula Gunawardena on Friday (20) said that traders will be allowed to transport essential goods to consumers during the curfew period.

Gunawardena stated this while inspecting the activities of the Pettah Wholesale Market on Friday morning (20).

He added that it is possible to obtain the necessary permits from the relevant police stations for the transportation of essential consumer goods.

However, despite the opening of the Manning Market yesterday (21) for wholesale trade, the attendance of traders was minimal due to the lack of awareness, said Manning General Trade Union Chief Organiser Anil Indrajith.

Meanwhile, the wholesale trade of the Peliyagoda Central Fish Market was also active during the curfew period, said its President Jayasiri Wickramarachchi.

Price comparison between June and July 2021

According to the latest report issued by the Central Bank of Sri Lanka (CBSL), overall inflation, as measured by the Colombo Consumer Price Index (CCPI) on a Year-on-Year (YoY) basis (July 2020-July 2021), is 5.7% in July 2021, up from 5.2% in June.

As per the report, the YoY inflation of the non-food group has increased from 2.5% in June 2021 to 3.2% in July 2021.

The Month-on-Month (MoM) change was attributed to a decrease of food items by 0.05% and an increase in non-food items by 0.55%, respectively.

According to the report, decreases in value change were reported for coconuts (0.22%), sea fish (0.10%), coconut oil (0.09%), vegetables (0.04%), rice (0.03%), green gram (0.02%), breadfruit (0.02%), and red onions (0.02%), while increasing value change was reported for fresh fruits (0.08%), dried fish (0.06%), eggs (0.05%), chicken (0.04%), sugar (0.04%), turmeric powder (0.04%), potatoes (0.03%), biscuits (0.02%), canned fish (0.02%), big onions (0.02%), beef (0.01%), butter (0.01%), dhal (0.01%), green chillies (0.01%), pepper (0.01%), and curry powder (0.01%).

Explaining the contribution of non-food items, the Central Bank stated that there was a 0.55% increase in these items.

Among the non-food groups, increases in value change were reported for the groups of clothing and footwear (0.03%); transport (0.28%); restaurants and hotels (0.20%); furnishing household equipment and routine household maintenance (0.02%); housing, water, electricity, gas, and other fuels (0.01%); recreation and culture (0.01%); and miscellaneous goods and services (0.01%).

However, insignificant value changes were reported for the groups of alcoholic beverages, tobacco and narcotics, and health.

Meanwhile, the price indices of the communication and education groups remained unchanged during the period.